May Day was celebrated with anarchy and protest around the globe. Bonds did a little celebration of their own after NAPM, though in a much less tense atmosphere stateside. April NAPM gained a tick to 43.2%, but this was well below 44% and the employment and priced paid components were also on the weak side. Additionally, the semi-annual NAPM survey found manufacturers the most pessimistic on their 12-month outlooks since the survey began back in 1962. This put the onus on Friday's payrolls to back up the case on higher Q1 GDP last Friday, but short-covering on the entire yield curve drove prices higher and yields down.
The June bond kept its nose above par, cleared 100-16 and did not stall out until it stretched to 101-08. Traders remained a little skeptical of the "flattening rally" with payrolls and the Treasury refunding ahead and a late rebound on stocks helped the bond settle 18/32 in the plus column at 101-01. The dollar lost traction in illiquid trade, while gas and oil climbed ahead of API inventory data. Fannie Mae, Worldcom and Household Finance stoked the non-governmental issuance fires.