Bond Market Update

Data Recon

• The December ISM Manufacturing Index checked in at 49.3% (Briefing.com consensus 48.5%) versus 48.4% in November. The dividing line between expansion and contraction is 50.0%, so the December reading suggests manufacturing sector activity contracted versus the prior month but at a slower pace. This was the ninth straight month (and 25th out of 26) that economic activity in the manufacturing sector contracted.
  • The key takeaway from the report is that manufacturing sector activity overall continued in a state of contraction, although the pace of contraction slowed at the same time the prices index picked up.
• Seeing some selling interest in wake of the ISM report, with some added focus on the pickup in the Pieces Index to 52.5% from 50.3%. Overnight gains have faded away on the selling interest.
• Yield check:
  • 2-yr: unch at 4.25%
  • 3-yr: +1 bp to 4.29%
  • 5-yr: unch at 4.38%
  • 10-yr: unch at 4.58%
  • 30-yr: unch at 4.80%