Still in The Range as Bonds Wait For Bigger Influences

Bonds were noticeably weaker to start the new month with most of the losses arriving after the start of European trading overnight. Indeed there was strong correlation between EU sovereign debt and Treasuries–especially at the EU opening bell. Some news stories suggested bonds were selling off due to news that an appeals court ruling that Trump tariffs were illegal, but that news was out on Friday night. If it were a compelling bond market motivation, it would have been more visible in the overnight trading that took place before the EU open. Either way, yields remained well within the prevailing range and it continues to be this week’s big-ticket econ data that has the best chance of challenging that range for better or worse. 

Econ Data / Events

S&P Global Manuf. PMI (Aug)

53.0 vs 53.3 f’cast, 49.8 prev

Construction spending (Jul)

-0.1% vs -0.1% f’cast, -0.4% prev

ISM Manufacturing Employment (Aug)

43.8 vs — f’cast, 43.4 prev

ISM Manufacturing PMI (Aug)

48.7 vs 49 f’cast, 48.0 prev

ISM Mfg Prices Paid (Aug)

63.7 vs 65.3 f’cast, 64.8 prev

Market Movement Recap

10:20 AM sharply weaker overnight. Some traction even before the ISM data, but a bit more now. 10yr still up 3.4bps at 4.263 but down from highs just over 4.30% earlier.  MBS down only an eighth after starting out down a quarter point.

12:03 PM 10yr up 5bps at 4.279.  MBS down 6 ticks (.19)

03:07 PM Flat in the PM.  MBS down 6 ticks (.19) and 10yr up 5.2bps at 4.282