ISM and NFP Team Up To Send Rates Sharply Lower

Bonds got off to a strong start today when the wage component of the nonfarm payrolls (NFP) came in weaker than expected with a big downward revision to last month's balmy number.  Given Powell's recent comments on wages, a moderate rally wasn't a surprise.  The surprisingly large rally didn't get underway until after the 10am ISM services data, which abruptly dropped into recessionary territory.

Econ Data / Events
    • Nonfarm Payrolls
      • 223k vs 200k f'cast, 256k prev
    • Unemployment Rate
      • 3.5 vs 3.7 f'cast, 3.6 prev
    • Wage growth 0.3 vs 0.4 f'cast
      • last month revised down to 0.4 from 0.6
    • ISM Services
      • 49.6 vs 55.0 f'cast, 56.5 prev
    • ISM new orders
      • 45.2 vs 56.0 prev
Market Movement Recap
08:40 AM

First move is stronger after NFP (due to wages).  Gains are choppy and minimal.  10s are currently still up 1.3bps on the day at 3.735 and MBS are down 2 ticks (0.06).

10:06 AM

Huge miss in ISM data = another jolt of rally momentum for bonds.  10s down almost 9bps at 3.638 and MBS up over half a point.

11:59 AM

Post-ISM rally extended until MBS were/are up nearly a full point.  10yr down 14.4bps at 3.578.  Fairly sideways for the past hour.

02:31 PM

Still relatively sideways, but now erring on the side of strength.  MBS creeping to day's best levels, up 29 ticks (.91).  10yr down almost 16bps at 3.564.

04:38 PM

Trading levels have stayed in line with the last update (i.e. drifting out near the highs of the day in MBS and near the lows of the day in TSY yields).