MBS Live Recap: NFP Swings For Fences, But Still Comes Up Short

This morning's commentary was titled "NFP Doesn't Matter (Even If It Looks Like It Does)."  Apparently NFP didn't like being called out because it did everything in its power to prove me wrong.  Ultimately though, it would need to create momentum that lasts beyond today in order to join the ranks of jobs reports that have been this much stronger than expected.  As it stands, it wasn't able to create momentum that lasted more than 5 minutes.  Those 5 minutes were fairly brutal however.

By 8:35am, 10yr yields had launched from 1.79-ish to nearly 1.86%.  They stayed in that range for more than an hour, but for those of us drinking the "NFP doesn't matter" kool-aid, the writing was already on the wall.  Here it was: an obligatory knee-jerk reaction to a massively stronger-than-expected report with an epic history motivating more bond market movement than any other report.  A modest recovery followed, but it was more than enough to prove the point.  

Go back more than a year or two with the same sort of data and we'd be looking at 6-16bps of weakness in Treasuries.  As it stands, we got 3bps--an amount we sometimes see for absolutely no reason at all.  The damage is even easier to stomach for MBS which lost only 2 ticks (0.06).  

Next week brings a Fed announcement and next weekend brings the much-awaited tariff deadline for China.  Markets are on pins and needles wondering if anything is going to happen before then (and assuming something probably will).