Bond Market Update

Data Recon

• Factory orders decreased 0.4% month-over-month in November (Briefing.com consensus -0.3%) following an upwardly revised 0.5% increase (from 0.2%) in October. Excluding transportation, factory orders rose 0.2% on the heels of a 0.2% increase in October. Shipments of manufactured goods edged 0.1% higher in November following a 0.2% decline in October.
  • The key takeaway from the report is that the weakness in factory orders was concentrated in the volatile transportation equipment space; otherwise, there was a modest pickup in order activity.
• December S&P Global US Services PMI 56.8 (prior 58.5) versus final reading of 56.1 for November. The dividing line between expansion and contraction is 50.0, and although the final December reading was revised down from the preliminary reading of 58.5, the final reading for December was above the final reading for November, indicating that the pace of expansion accelerated versus the prior month.
• Yields have pressed higher in the wake of today's reports.
• Yield check:
  • 2-yr: unch at 4.28%
  • 3-yr: +1 bp to 4.33%
  • 5-yr: +3 bps to 4.44%
  • 10-yr: +4 bps to 4.64%
  • 30-yr: +5 bps to 4.85%