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S&P PMI sparks sharp bond selloff as markets reprice risk

The initial move after 9:45 a.m. was driven by S&P PMI data, with subsequent selling largely tracking stock losses.

Reported · Written up by our desk · Economy

Mortgage News Daily said the severity of the day’s bond selloff was tied to a catalyst in economic data, not to factors such as a diesel export ban, oil price moves, or the 5-year Treasury auction.

The outlet noted that an initial price pop around 9:45 a.m. was “entirely driven” by S&P PMI, and that most of the selling after that unfolded in a steady pattern rather than through obvious event-driven spikes.

It also said the market reaction resembled how markets behave when an outlier in economic data hits a nervous environment, with investors already focused on a set of upcoming, more important releases and the implications for the Fed rate hike outlook.

Mortgage News Daily stressed it was not claiming 10-year yields were caused in a direct one-to-one way by the PMI, but instead argued the report acted as a trigger for a technical repricing of risk heading into next week’s economic data.

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