Big Reversal in Bonds After Stocks Sell Off

Bonds paradoxically sold off after this morning's weaker jobs number.  We could talk about why that might have happened or simply focus on what happened next: a big sell-off in stocks that quickly pushed bonds past key stop-loss levels.  After that, it was game over and the snowball rally was self-sustaining through the 3pm close.  MBS underperformed significantly yet again, but nonetheless managed solid gains on the day.

Econ Data / Events

  • Fed MBS Buying 10am, 11:30am, 1pm

  • Nonfarm payrolls 210k vs 550k f'cast, 546k prev
    Unemployment Rate 4.2 vs 4.5 f'cast, 4.6 prev

  • ISM Non-Manufacturing 69.1 vs 65.0 f'cast, 66.7 prev

Market Movement Recap
08:47 AM

Very slightly stronger overnight.  Mixed reaction to payrolls now giving way to weakness.  10yr and MBS both moving into weaker territory now. 10yr swing from 1.412 to 1.449.  

10:03 AM

New record high and strong internal components.  No huge sell-off, but also no positive implications for bonds in the data. 10yr yields remain modestly higher (up 1bp at 1.453) and 2.5 UMBS are down 2 ticks (.06).

01:36 PM

snowball buying in Treasuries with yields down 8bps to 1.36.  MBS following but underperforming with 2.5 coupons up a quarter point at 102-15 (102.47).