What Will it Take For Bonds to Recover?

What Will it Take For Bonds to Recover? Another day, another sell-off without any satisfying explanations. To be fair, you could say bonds just traded the curve today with anything 3yrs or shorter rallying at the expense of the longer end of the curve. But for the mortgage market, <3yrs is too short-term to matter. Data and headlines did not line up well at all with the weakness, so take your pick from the general themes we've added to the daily lock/float considerations. At some point, yields will have moved high enough to motivate investors to buy bonds for investment purpose (as opposed to tactical or compulsory trading purposes). Until then, the trend is not your friend.  Econ Data / Events ISM Biz Activity (Sep) 56.5 vs -- f'cast, 61.7 prev ISM N-Mfg PMI (Sep) 54.9 vs 55 f'cast, 55.4 prev ISM Services Employment (Sep) 50.1 vs -- f'cast, 47.8 prev ISM Services New Orders (Sep) 59.8 vs -- f'cast, 60.9 prev ISM Services Prices (Sep) 74.0 vs -- f'cast, 72.6 prev Market Movement Recap 10:07 AM Modestly weaker at the open, but holding ground after ISM. 10yr up 1.7bps at 5.296. MBS down 1 tick (.03). 12:51 PM weakest levels. no new reasons. MBS down 10 ticks (.31) and 10yr up 5.5bps at 5.334 04:01 PM Off the weakest levels, but again, not for any particular reason. MBS down a quarter point and 10yr up 3bps at 5.309