While bonds had begun to pull back a bit between the NFP rally and the just-released ISM data, the latter doesn't appear to be causing any major problems.  The headline PMI came in at 56.5 vs a median forecast of 57.0.  Internal components of the report were fairly tame, with about a 50/50 split between stronger and weaker readings.

Most notable among the internal components was the "prices paid" index coming in at 59.0 vs 56.1 previously.  This is another "highest since 2014" reading from ISM (like several of the line-items from Wednesday's Manufacturing PMI).  It's just another anecdote for inflation potentially putting some roots down after years in purgatory. 

Bond markets don't appear to be taking that news too hard though, with trading levels little-changed since the data.

10yr yields remain in a narrow range between 2.43 and 2.452.  The big risk here is that yesterday's resistance levels were similar (2.433).  While we briefly broke below that earlier, subsequent bounces suggest it's still a barrier that's causing some problems for bond bulls.  

Fannie 3.5s are up 5 ticks (5/32nds) on the day and also in their narrow post-NFP range of 102-08 to 102-12 (currently 102-11).