Bonds are down but off their morning lows in a curious reaction to some fairly positive economic data.  The ISM survey was definitely the highlight of the morning and the report definitely showed more strength in the manufacturing sector than expected.  The headline number came in well above expectations and a look at the details of the report showed higher prices paid and the first positive employment reading in a very long time.  Construction spending also beat estimates as did pending home sales.  The “normal” reaction to data like this would be for stocks to climb and bonds to fall.  Stocks are doing their part with all of the major indices showing gains but bonds have not seen the selling that one would expect. 
 
We have a busy week ahead.  The FOMC begins their 2 day meeting tomorrow with the release of their policy statement on Wednesday.  ISM Services is also due up Wednesday and the employment report will be released on Friday.