PMI

Bonds Manage to Hold Gains Despite Risk Recovery Everything has been driven by the “risk-on, risk-off” movements relating to the banking sector over the past 2 weeks.  The only brief exception was on Fed day, but markets still managed to fall into a flight-to-safety pattern by the end of that day.  Another flight-to-safety showed up overnight–this time driven by Deutsche Bank.  EU bonds led US bond yields lower, but the momentum reversed course before 7am ET.  The rest of the day saw stocks and EU bonds trudge back toward or above yesterday’s levels.  US bonds managed to hold some of the gains with 3.382 emerging as a good pivot point for 10yr yields.   Econ Data / Events Durable Goods -1.0 vs 0.6 f’cast, -5.0 prev Durables, excluding aircraft/defense 0.2 vs 0.0 f’cast, last month revised to 0.3 from 0.8 Markit Services PMI 53.8 vs 50.5 f’cast, 50.6 prev Market Movement Recap 09:15 AM 10yr down 11.2bps at 3.302.  MBS up more than a quarter point on Deutsche Bank concerns.  10:00 AM Losing ground after PMI data and a correction in EU bonds.  10yr down 5.6bps at 3.359.  MBS down an eighth on the day and a quarter point from AM highs. 11:18 AM Recovering a bit.  MBS back near unchanged levels.  10yr down 6bps at 3.356. 02:50 PM MBS still near unchanged levels.  10yr now down only 4.5bps at 3.369