MBS Live Recap: Rates Rise After Super Weak Jobs Data; Wait... What?

As the headline suggests, NFP (the "nonfarm payrolls" component of the big jobs report) was much weaker than expected today (98k vs 180k forecast).  On most any other NFP day in the history of the world, that's a free ticket to bond market gains for the entire day.  But not today!

In fact, 10yr yields ended the day more than 4bps higher (with a 12bp range!) and Fannie 3.5s lost a quarter point (more than half a point from rate sheet print times).  Those stats mean bond markets found motivation for a big rally in the morning and then lost it all (and then some) by the close.  Why would they do such a thing?

This is what happens when every trader who would even entertain the notion of buying bonds gets blasted with major justification to do so not once, but twice in the same day.  The overnight headlines regarding air strikes in Syria brought in the first raft of buyers.  Any other potential buyers got another chance with the super weak NFP.  Both events prompted big improvements in bonds, and both left bond markets with tapped-out buyers.  It's really that simple.

MBS Live subscribers can watch the attached video for significantly more detail, or revisit any of the day's alerts/updates with the following links:

• Overnight Syria Update
• Pre-NFP "Day Ahead"
• NFP Update
• Several Reprice Alerts: 1st, 2nd, 3rd
• Explaining the Dudley Move