Incidental Weakness But No Big Picture Change

There were no economic reports on tap today and no obvious market moving headlines during the domestic session. The lighter volume and liquidity made the bond market more susceptible to random sources of inspiration in the overnight session. Political developments in Japan were thus able to have a larger impact than normal and, in this case, that impact was unfavorable for bonds. That said, the selling was ultimately moderate. Larger scale momentum requires an end to the shutdown (thus allowing things like the jobs report to be published).

Econ Data / Events

ISM Biz Activity (Sep)

49.9 vs 51.8 f’cast, 55 prev

ISM N-Mfg PMI (Sep)

50.0 vs 51.7 f’cast, 52.0 prev

ISM Services Employment (Sep)

47.2 vs — f’cast, 46.5 prev

ISM Services New Orders (Sep)

50.4 vs — f’cast, 56.0 prev

ISM Services Prices (Sep)

69.4 vs — f’cast, 69.2 prev

Market Movement Recap

10:51 AM weaker overnight with a modest recovery early.  MBS down 1 tick (.03) and 10yr up 2.6bps at 4.143

03:03 PM Gradually weaker and now at the weakest levels of the day.  MBS down 6 ticks (.19) and 10yr up 4.6bps at 4.164