MBS RECAP: Econ Data Hurt, Fed Offered Some Healing

Posted To: MBS Commentary

Between this morning's economic reports and opening tradeflows, there was quite a bit more volume early in the day. This was almost exclusively in response to the ADP and ISM data. Both were exceptionally strong, and both had clearly-delineated impacts. ADP was first up at 815am. Coming in at 246k vs a 165k forecast, the immediate conclusion was that NFP Friday might be even more challenging for bonds considering the existing forecast of 175k. ISM Manufacturing data at 10am didn't help the cause. The employment component came in at the highest levels since 2014 (as did the headline PMI for that matter), further adding to the case for a Friday surprise . Bonds agreed and sold off to the highest yields of the week in the 10am hour. We managed to stay sideways until the 2pm Fed Announcement...(read more)

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