Logical Outcome For Bonds. Still Waiting on Data to Tell a New Story
The jobs report came in just slightly above expectations in terms of the payroll count and convincingly lower in terms of the unemployment rate. The data would have needed to be much weaker than expected to get even a small amount of attention from the Fed. Markets traded accordingly with rates making a measured move up to the highest levels of the week. Attention now turns to the Consumer Price Index (CPI) on Thursday for the next major dose of guidance.
Econ Data / Events
263k vs 250k f’cast, 315k prev
3.5 vs 3.7 f’cast, 3.7 prev
Labor Force Participation
62.3 vs 62.4 f’cast, 62.4 prev
Market Movement Recap
08:38 AM Treasuries sideways to slightly weaker in the overnight session, now selling more sharply after NFP. MBS down half a point and 10yr yields up 5.6bps at 3.883. MBS would be doing a bit better if they were liquid (bid vs ask = 0.25 presently. 0.03 is liquid)
11:41 AM Pushing back a bit, fairly steadily after this morning’s weakness. 10yr now up only 2.7bps at 3.855 and MBS down “only” 7 ticks (.22). Stocks remain unhappy with S&P futures bouncing along the lows, down more than 2%.
01:41 PM Friendly mid-day bounce stalling out at the 3.85% resistance level in 10yr yields. MBS bounced lower after coming within an eighth of a point of unchanged (now back to a quarter point weaker). 10yr yields up 4bps at 3.867.