MBS MID-DAY: Ugly Morning For Bond Markets; Strong Jobs Numbers Add to Pain

By: Matthew Graham

This morning's MUCH-stronger than expected NFP hit bond markets while they were already on the back foot in terms of the February trend.  It followed another "higher low" in German Bunds, which is one of the main co-indicators of Treasury weakness at the moment.  Bottom line, it was big, bad news for an already vulnerable bond market and snowball selling has since run its course.

Here's a look at some of the technical considerations.  Note that today fits right in with the 2 other big selling days so far in February.  Not-labeled, the white line is the 50-day moving average, which could be a target for traders looking to reload on Treasuries.  In the best case, that's potentially already happening at 1.95, which has acted as support this morning.  This has recently been an important level for 10yr yields as it also provided support after the post-ECB-QE weakness in January. 

MBS have felt plenty of the weakness today, with Fannie 3.0s down nearly three quarters of a point.  The losses have been steady throughout the morning, resulting in widespread negative reprices.


MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
MBS
FNMA 3.0
102-09 : -0-22
FNMA 3.5
105-01 : -0-15
FNMA 4.0
106-28 : -0-08
Treasuries
2 YR
0.6440 : +0.1200
10 YR
1.9430 : +0.1260
30 YR
2.5170 : +0.0880
Pricing as of 2/6/15 2:06PMEST

Morning Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
12:59PM  :  ALERT ISSUED: Negative Reprices Now Highly Likely
11:03AM  :  ALERT ISSUED: Another Incremental Increase in Negative Reprice Risk
10:22AM  :  ALERT ISSUED: Negative Reprice Risk Increasing
8:42AM  :  ALERT ISSUED: First Move is Weaker Following NFP

Live Chat Featured Comments
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "1.953 was 1/22 high"
Christopher Stevens  :  "Next ceiling MG?"
Matthew Graham  :  "423k from 353k and 329k from 252k"
Jeff Anderson  :  "400k+ in nov? Wow."
Matthew Graham  :  "look at that revision!!!"
Matthew Graham  :  "RTRS- US JAN PRIVATE SECTOR JOBS +267,000 (CONS +225,000), VS DEC +320,000 (PREV +240,000)"
Matthew Graham  :  "RTRS- U.S. JAN AVERAGE HOURLY EARNINGS ALL PRIVATE WORKERS +0.5 PCT (CONS +0.3 PCT) VS DEC -0.2 PCT (PREV -0.2 PCT) TO $24.75 VS DEC $24.63; JAN YEAR-ON-YEAR EARNINGS +2.2 PCT"
Matthew Graham  :  "RTRS - U.S. JAN JOBLESS RATE 5.7 PCT (CONSENSUS 5.6 PCT) VS DEC 5.6 PCT (PREV 5.6 PCT)"
Victor Burek  :  "earnings up big"
Andy Pada, Jr.  :  "revision"
Matthew Graham  :  "RTRS - U.S. JAN LABOR FORCE PARTICIPATION RATE 62.9 PCT VS DEC 62.7 PCT (PREV 62.7 PCT)"
Matthew Graham  :  "RTRS - U.S. JAN NONFARM PAYROLLS +257,000 (CONSENSUS +234,000) VS DEC +329,000 (PREV +252,000), NOV +423,000 (PREV +353,000)"