Today was a largely uneventful return from the extended weekend with bond markets doing very little to react to news or economic reports.  Chicago PMI is hit and miss when it comes to moving markets, but certainly no stranger to the spotlight.  At 48.7 versus a median forecast of 54.0, today's Chicago PMI was arguably weak enough that we should have seen a more noticeable response in bond markets.  Instead, the morning's gains leveled-off just as the data was released.  The rest of the day was spent drifting sideways to slightly stronger, resulting in a smattering of small, positive reprices.

What can we glean from the absence of response to the Chicago PMI data?  Nothing earth-shattering, but perhaps this helps us put the rest of the week in perspective.  First of all, today was "month-end"--a special deadline for certain traders who have to be holding a certain amount of various bonds in order to meet the requirements of the funds they manage.  We can certainly assume that much of that month-end buying had already taken place by last week, but today's morning resilience suggests there were a few more buyers waiting in the wings. 

The more important conclusion for the rest of the week is that there will be a high bar for economic data that would otherwise have an impact on trading levels.  This means we could be waiting at least until Wednesday for something like ADP, but possibly even until Thursday's ECB Announcement or Friday's NFP before seeing a bigger move in rates.

Finally, the default warning on a month-end day with a happy ending is this: there's always a risk that today's happy ending was made possible by the extra month-end buying.  Such days are often good short term lock opportunities.