MBS Live Recap: Some Sound and Fury, but No Significance

This is more of a recap of the week as a whole because if I tried to just cover today, the screen would look too blank!  NFP came out weaker than expected.  No one cared for better or worse.  The end... seriously!

There was a bit of volatility following the jobs data as traders searched for significance in the labor force participation slump or the big miss in wage growth numbers, but all of these things are "side-burner" at best at this stage in the expansionary cycle (i.e. we've had such a long time with decent-to-great payroll growth that nothing much matters until it slips more than it already has in terms of moving averages).

The volatility gave way to flat trading and then a drift to barely-stronger levels to end the day.  That was in line with the week's broader theme of "slight improvement" combined with "volatility at first" following the big headlines.  After initial volatility (and we're being generous in calling 3-4bps moves in 10yr yields "volatile") bonds continued settling into a narrow, slightly stronger trend channel all week long.  To top it all off, volumes were average and relatively unchanged every single day.  

It's unclear what it will take to change the tone, but if you had to pick a stance based on what we've seen recently, it would be very slightly bullish and very excessively cautious--just like the trading momentum.