Data Didn’t Hurt, But Bonds Underperformed The Oil Price Recovery

Data Didn't Hurt, But Bonds Underperformed The Oil Price Recovery Today's headline is somewhat misleading. It points out the fact that oil prices made it back to yesterday's lows whereas bond yields didn't even come close. This is all true, assuming we're looking at front month oil prices. But if we use a longer-term futures contract for oil, the correlation with bonds was actually closer to 1:1. Either way, the bond rally only unwound a fraction of yesterday's losses and that's especially true for MBS (5.0 coupons lost half a point yesterday, but regained less than a quarter point today). Econ data didn't hurt, but it didn't exactly help either. ISM and Job Openings were both very close to consensus. Econ Data / Events Trade Gap (Mar) -60.30B vs $-60.9B f'cast, $-57.3B prev S&P Global Services PMI (Apr) 51.0 vs 51.3 f'cast, 49.8 prev ISM Biz Activity (Apr) 55.9 vs -- f'cast, 53.9 prev ISM N-Mfg PMI (Apr) 53.6 vs 53.7 f'cast, 54.0 prev ISM Services Employment (Apr) 48.0 vs -- f'cast, 45.2 prev ISM Services New Orders (Apr) 53.5 vs -- f'cast, 60.6 prev ISM Services Prices (Apr) 70.7 vs -- f'cast, 70.7 prev New Home Sales (Mar) 682K vs 0.65M f'cast, 587K prev USA JOLTS Job Openings (Mar) 6.866M vs 6.84M f'cast, 6.882M prev Market Movement Recap 09:04 AM Modestly stronger overnight with bonds following oil prices. 10yr down 1.5bps at 4.422 and MBS up an eighth. 10:08 AM Slightly stronger after 10am data. MBS up 5 ticks (.16) and 10yr down 2.7bps at 4.41 12:14 PM best levels of the day. 10yr down 3.2bps at 4.406 and MBS up a quarter point. 02:42 PM Off best levels. MBS up 5 ticks (.16) and 10yr down 2bps at 4.419