Construction Spending was +0.2% for June. Private residential spending was down. Private nonresidential and public construction spending were up.
ISM Manufacturing Index for July was 50.9 vs. 55.3 for June and estimates of 54.3. Readings below 50 mean a contraction. The full report also shows inflation moderating. This continues the recent trend which was created by businesses getting ahead of the consumer.
Rates dropped as bonds rallied on the ISM news, but also because of Friday’s GDP. I cannot emphasize how awful the GDP report was, and I’ll be publishing a more detailed analysis of it this Friday. A weak Employment Report this Friday following an awful GDP report could send the 10-year yield down close to 2.5%, MBS would also rally, and rates would drop further.