MBS were completely flat early.

Bonds extended Friday’s selling pressure at the start of the overnight with both 10yr yields and longer-run Fed rate expectations lurching higher in Asia. The European session added its own version of the same theme, but with more focus on the longer end of the yield curve with German Bunds rising 3bps in short order after opening nearly 3bps higher.

S&P Global Services PMI = 54.9 vs 55.1 f’cast, [53.6 previously]

ISM Non-Manufacturing = 50.3 vs 52.2 f’cast, 51.9 prev

Factory Orders = 0.4 vs 0.8 f’cast, 0.9 prev

Over the weekend, OPEC+ met and announced no changes to it’s planned oil production cuts for the rest of the year. Saudi Arabia announced it would voluntarily reduce it’s output to 9m barrels per day (from 10m).

Regulators are planning to increase capital requirements for the big banks by up to 20% in response to the regional bank crisis that took down Silicon Valley Bank and others. Even banks that rely primarily on fee income will see an increase. The plan is to characterize fee income as an operational risk. I didn’t see anything regarding mortgages – especially servicing, however I would imagine they might look again at capital hits for servicers.

Investor purchases of homes fell by almost 50% in the first quarter compared to a year ago. This is the largest decline on record, and occurs as asking rents are beginning to level out (or even decline in some markets) while borrowing costs are surging.

Bonds remained in selling mode after Friday’s jobs report.  10yr yields rose in Asia and Europe before hitting the highest levels of the day just before the domestic session opened.  A glut of corporate bond issuance created additional headwinds, but they were no match for the weaker ISM Services data (50.3 vs 52.2).  That was good enough to get both Treasuries and MBS back to “unchanged” levels or slightly stronger.

MBS closed up 3 bps.  Stocks lost about 9 points.  10yr lost 1 bp.