Logical Reaction to Jobs Data, But Why The Mid-Day Bounce?

Nonfarm Payrolls (NFP), the headline component of the big jobs report, crushed even the most bullish forecasts (336k vs 170k median forecast).  In a data dependent bond market, it was no surprise to see yields spike significantly and quickly.  10s hit 4.887 at the peak.  It was a surprise, however, to see a fairly substantial mid-day recovery that erased more than half of the AM losses.  Unfortunately, that recovery is not attributable to any fundamental motivation in the economy or news headlines.  Rather, it's likely a byproduct of trading dynamics often seen on the Friday before a 3 day weekend.

Econ Data / Events
    • Nonfarm Payrolls
      • 336k vs 170k f'cast, 227k prev (revised up from 187k)
    • Unemployment Rate
      • 3.8 vs 3.7 f'cast, 3.8 prev
    • Earnings
      • 0.2 vs 0.3 f'cast
    • Participation rate
      • unchanged at 62.8
Market Movement Recap
08:33 AM

Hit hard after jobs data.  10yr up 11.8bps at 4.837.  MBS down 5/8s.

08:52 AM

Here's that sell-off... 10yr up 15.8bps to 4.877.  MBS down 3/4

11:03 AM

Decent little bounce.  MBS down "only" half a point.  10yr up 9bps at 4.809.

02:35 PM

Bounce back got more "decent" and has been flat all afternoon.  MBS down only a quarter point.  10yr up 5.9bps at 4.778