Some would say there were warning signs, such as last week's Chicago PMI surging to the 2nd highest level since 2022, but that was generally dismissed as a noisy outlier in a data set that is volatility-prone. In this case, however, Chicago PMI was prescient. Today's ISM Manufacturing data surged to the highest level since 2022, both in terms of the headline and new orders. Even though this report isn't as much of a market mover as the non-manufacturing version, this is a big enough beat to make an exception. Bonds are clearly responding, and not in a rate-friendly way.
Minimal Overnight Volatility. Waiting on Data and War News
With the potential for a Hormuz deal floated earlier in the week, a more substantive announcement remains the biggest opportunity for the bond market until Friday’s jobs report (and even then, could supersede the jobs report depending on the details). …