More Defensive After Jobs Report, But Not Necessarily Because of it

The jobs report was hard-pressed to live up to its historical market movement potential this morning, but it did its best to surprise markets.  Bonds reacted momentarily but quickly traded in the opposite direction.  The rest of the day brought other concerns, however, and the resulting market movement has risk-averse clients reconsidering their lock/float stance. 

Econ Data / Events

  • 20min of Fed 30yr UMBS Buying 10am, 1130am (M-F) and 1pm (T-Th)

  • Nonfarm Payrolls 1.763m vs 1.6m f'cast, 4.791m prev

  • Unemployment Rate 10.2 vs 10.5 f'cast, 11.1 prev

Market Movement Recap
08:45 AM

Fairly small but very fast sell-off following strong NFP, but now very contained.  Minimal weakness in Treasuries.  MBS back into POSITIVE territory on the day.  Stocks made quick gains, but have now erased them.

11:28 AM

Bonds reversed course after hitting the strongest levels just before 10am.  Treasuries are now weaker on the day (10yr up less than 2bps) and MBS are just holding onto a 1 tick (0.03) gain.

02:15 PM

MBS slightly weaker now and very choppy/illiquid.  This created some reprice risk as discussed in this alert.  Still only 1 tick weaker on the day (-0.03).  10yr yields are remaining below their .57% ceiling (.56% currently).