Bond Market Update

Data Recon

• The November ISM Manufacturing Index checked in at 48.4% (Briefing.com consensus 47.6%) versus 46.5% in October. The dividing line between expansion and contraction is 50.0%, so the November reading suggests manufacturing sector activity contracted versus the prior month but at a slower pace. This was the eighth straight month (and 24th out of 25) that economic activity in the manufacturing sector contracted.
  • The key takeaway from the report is that manufacturing sector activity overall continues to be weak, but showed a green shoot with the new orders index returning to expansion territory after seven straight months of contraction.
• Total construction spending increased 0.4% month-over-month in October (Briefing.com consensus 0.1%) following an unrevised 0.1% increase in September. Total private construction was up 0.7% month-over-month while total public construction declined 0.5% month-over-month. On a year-over-year basis, total construction spending was up 5.0%.
  • The key takeaway from the report is that residential construction activity rebounded nicely, led by single family construction.
• Yield Check:
  • 2-yr: +6 bps to 4.22%
  • 3-yr: +6 bps to 4.17%
  • 5-yr: +7 bps to 4.13%
  • 10-yr: +6 bps to 4.24%
  • 30-yr: +4 bps to 4.41%