Here's the rundown on the ISM Non-Manufacturing data:
- ISM REPORT ON U.S. NON-MANUFACTURING SECTOR SHOWS PMI 57.1 IN SEPT (CONSENSUS 53.0) VS 51.4 IN AUG
- ISM NON-MANUFACTURING BUSINESS ACTIVITY INDEX 60.3 IN SEPT (CONSENSUS 52.2) VS 51.8 IN AUG
- ISM NON-MANUFACTURING PRICES PAID INDEX 54.0 IN SEPT VS 51.8 IN AUG
- ISM NON-MANUFACTURING NEW ORDERS INDEX 60.0 IN SEPT VS 51.4 IN AUG
- ISM NON-MANUFACTURING EMPLOYMENT INDEX 57.2 IN SEPT VS 50.7 IN AUG
- ISM NON-MANUFACTURING PMI AT HIGHEST SINCE OCTOBER 2015, INCREASE IN INDEX BIGGEST SINCE FEBRUARY 2011
- ISM NON-MANUFACTURING BUSINESS ACTIVITY INDEX, EMPLOYMENT INDEX AT HIGHEST SINCE OCTOBER 2015
This is a violent swing for this data set, which moved from the lowest level in more than 6 years to the best level since October 2015 in one fell swoop. To emphasize one of the newswires above, it was the biggest gain in more than 5 years.
The ISMs (both manufacturing and non-manufacturing) are probably the most important data sets apart from NFP when it comes to consistent market movement potential. So a big beat is a big deal.
Treasury/MBS trading reflects that at the moment with 10yr yields up 3bps to 1.72 and Fannie 3.0s down 5 ticks to 103-15. Negative reprices are becoming likely for early/aggressive lenders.
It would take another 2-3 ticks of weakness for reprices to be widespread, but even now, the abruptness of the move means that the risk can't be ruled out for any lender.
