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If Data Stays in This Week’s Range, The Highs Are In

If Data Stays in This Week’s Range, The Highs Are In Friday’s weak jobs report and strong bond market reaction raise bigger questions than they answer.  Granted, it is very nice to answer the question of whether the gains over the past two days were justified, but now we have to wonder if this entire week is enough to inform a long-term rate ceiling.  Using our own advice about needing to see 2-3 months of similar data before drawing such conclusions, clearly it’s not enough.  If we could know that the next 2 rounds of big-ticket data would be similarly cool, the top is in for rates.  That’s still a big “if.” Econ Data / Events Nonfarm Payrolls 150k vs 180k f’cast, 297k prev Unemployment Rate 3.9 vs 3.8 f’cast, 3.8 prev Earnings 0.2 vs 0.3 f’cast, 0.3 prev ISM Services PMI 51.8 v 53.0 f’cast Market Movement Recap 09:35 AM Slightly stronger overnight and now much stronger after jobs data.  MBS up a full point.  10yr down 15.5bps at 4.504. 11:32 AM Off the best levels by roughly 3/8ths in MBS, but still up 5/8ths on the day.  10yr down 13.6bps at 4.527. 02:17 PM No further losses in MBS.  6.0 coupons back up more than 3/4ths of a point.  10yr down 11.5bps at 4.554 04:48 PM 10yr yield drifting higher into the 5pm close, but still down 8.4bps on the day at 4.579.  MBS have been flatter with 6.0 coupons just 1 tick (0.03) off a 3/4 point gain.

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