MBS MID-DAY: Bonds Swing From Losses to Gains After Manufacturing Data

By Matthew Graham

Posted To: MBS Commentary

Surprisingly and refreshingly, today’s ISM Manufacturing data has been a clear source of motivation for trading activity today. After it came out at the weakest levels since June, bonds rallied significantly and stocks fell sharply. There’s a chance that investors are sensing a negative shift in economic momentum as the ISM numbers were unable to break above an index value of 60.0, despite coming close in 3 out of the past 5 months. Indeed, 59.3 is the highest reading since June 2004, but there have been 14 reports at 57.5 or higher. 15 minutes before the ISM data, the less-highly-regarding Markit PMI data offered a potential early indication of weakness in the manufacturing sector. It came in at the lowest levels since January 2014, and bond markets seemed to react to that. This is…(read more)

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