MBS MID-DAY: Slightly Weaker but Outperforming Treasuries

For lack of a better way to explain it, Friday's post-NFP rally was like a final, glorious charge into enemy territory.  Bond markets had already pushed a bit farther than they were likely to push, and had kept up the fight for a bit longer.  Coming into NFP, the bar was set high in terms of how weak the data would need to be in order to get a positive response from bond markets. 

Truth was stranger than fiction as the data was so weak that it left no doubts.  The only question was when bonds would bounce and how much of the gains would we give back.  THIS is the psychology that we see playing out in markets today--this unapologetic contingent of market participants who weren't keeping it a secret that they were looking to "sell strength" if bonds managed a strong showing after NFP. 

Treasuries continue leaking sideways to slightly higher.  Interestingly enough, they also continue trading in slightly better territory than before Friday's NFP.  MBS are doing better by comparison.  They're weaker, to be sure, but not as much as Treasuries.  Here's how the two charts look by comparison: