Logical Reaction to Jobs Data, But Why The Mid-Day Bounce?
Logical Reaction to Jobs Data, But Why The Mid-Day Bounce? Nonfarm Payrolls (NFP), the headline component of the big jobs report, crushed even the most bullish forecasts (336k vs 170k median forecast). In a data dependent bond market, it was no surprise to see yields spike significantly and quickly. 10s hit 4.887 at the peak. It was a surprise, however, to see a fairly substantial mid-day recovery that erased more than half of the AM losses. Unfortunately, that recovery is not attributable to any fundamental motivation in the economy or news headlines. Rather, it’s likely a byproduct of trading dynamics often seen on the Friday before a 3 day weekend. Econ Data / Events Nonfarm Payrolls 336k vs 170k f’cast, 227k prev (revised up from 187k) Unemployment Rate 3.8 vs 3.7 f’cast, 3.8 prev Earnings 0.2 vs 0.3 f’cast Participation rate unchanged at 62.8 Market Movement Recap 08:33 AM Hit hard after jobs data. 10yr up 11.8bps at 4.837. MBS down 5/8s. 08:52 AM Here’s that sell-off… 10yr up 15.8bps to 4.877. MBS down 3/4 11:03 AM Decent little bounce. MBS down “only” half a point. 10yr up 9bps at 4.809. 02:35 PM Bounce back got more “decent” and has been flat all afternoon. MBS down only a quarter point. 10yr up 5.9bps at 4.778