First thing’s first, there’s not much about a 10bp gain in 10yr yields and nearly a half a point of MBS weakness that would be considered “mini,” but in the recent context, it only undoes about a quarter of the recent rally. Plus, we have history with the word “meltdown,” so I figured I’d qualify it in this case.
Things were bad from the outset this morning as Chinese manufacturing data started the overnight session off with solid “risk-on” momentum (stronger stocks and weaker bonds). European data didn’t help even if it didn’t hurt that much.
Domestic data looked like a storm that could have been weathered at first. Following the Retail Sales report, bonds didn’t break into any weaker territory than they’d seen overnight. After the 10am data, however, game over. A combination of stronger construction spending, business inventories, and especially ISM Manufacturing data sent bonds flying. This also set the tone for April’s early trading, which led to a bit of a snowball (or mini meltdown?) heading into the close.
The late March tone has clearly shifted but would likely require additional positive data if it’s going to maintain even a portion of today’s pace.