Bond markets had a great day. Right from the start of the overnight session, Asian equities markets were pulling global bond yields and stock prices lower. The rally continued through the first half of the European session, which brought us near the best levels of the day just before ADP Employment data.
ADP is the sort of report that can definitely do a lot of damage to bond markets when it’s much stronger than expected. Indeed, it was much stronger than expected today! But bonds didn’t lose their composure. In fact, they didn’t lose much ground at all–opting instead to simply level off and trade mostly sideways until the afternoon’s FOMC Minutes.
Given that the FOMC Minutes merely serve as a more detailed synopsis of a story whose ending we already know (i.e. the Fed hiked rates at the December meeting), there was never much to be learned this time around. Contrast that to past instances where the Minutes have brought new info to light and had a big impact. In other words, the biggest variable in Fed policy was the hike itself, so the Minutes don’t add anything enlightening. Markets traded accordingly with bonds ultimately trickling to the best levels of the day at the close.