Good Thursday AM,

Lots of data today and most of it was not bond friendly:

• ISM Manufacturing 60.2 vs estimates of 54.5
• Construction Spending 1.4 vs estimates of 0.8
• Initial Weekly Jobless Claims 837K vs estimates 850K
• PCE Core YOY 1.6 vs estimates 1.4
• Personal Income -2.7 vs estimates -2.4
• Personal Spending 1.0 vs estimates 0.8

Equities continue advancing on the news and Bonds are mixed today. Mortgage Bonds opened weak and broke the upward trendline, but has since climbed above yesterday’s close. The ten-year is under-performing relative to the MBS and the yield has risen to .68. We tried to break above the .68 resistance and at one point this morning we tested .71. I credit this weakness to the economic releases this morning. Construction Spending, Personal Spending, and Jobless Claims all beat expectations. All three of these indicators are important and suggestive of continuing recovery. Although, before we get too excited, we should note that we still have almost 10 times the normal amount of people filing for unemployment each week. Tomorrow brings the Jobs report which is always a market mover. Currently markets are expecting 850k new jobs. That’s a pretty high water mark but previous months were north of 1 million so it’s really like throwing a dart at a board right now. I would expect increased volatility. Floating is riskier than usual.

Please remain safe and healthy, make today great.