Positioning and Data Deliver Double Whammy For Bonds
There were no whammies last week as bonds drifted sideways to slightly stronger in a narrow range.  The new week/month began with an unpleasant double whammy, unfortunately, due to positioning and economic data.  Traders began selling in waves right out of the gate.  The first two waves (8am and 8:20am) were best explained by traders closing out last week's 3.5-day weekend protections and other traders opening new positions for the month of April. Additional selling followed the stronger PMI data (both from S&P and ISM) which included higher price components.  Longer-dated Treasuries fared much worse at first, but short-term yields closed the gap a bit by the afternoon.  All told, 10yr yields jumped more than 12bps to close just over the 4.32% technical level.   MBS lost roughly half a point by 4pm. 
Econ Data / Events
ISM Manufacturing PMI
50.3 vs 48.4 f'cast, 47.8 prev
ISM Prices Paid
55.8 vs 52.7 f'cast, 52.5 prev
Market Movement Recap
09:20 AM Roughly unchanged overnight, but sharply weaker since 8am, especially for the long end of the curve.  MBS down 5 ticks (.16) and 10yr up 5.6bps at 4.257.
11:03 AM Bigger sell-off after ISM data.  MBS down almost half a point.  10yr up 11.5bps at 4.316.
01:04 PM Fairly flat at the weakest levels.  MBS down a half point.  10yr up 12.5bps at 4.326