If there was ever a time when economic data was meaningless as a market mover, the post-Covid era is certainly a front runner. However, we know that when the temporary distortions and volatility set in on their own, these dynamics will change. We have seen bonds react to non-farm payrolls a number of times, if only temporarily. Therefore, we cannot reject the job report as a non-event. Bonds appear to be on the caution side earlier this week in case the data rekindles an uptrend in the job market.

Economic data / events

  • Fed MBS purchases 10 a.m., 11:30 a.m., 1 p.m.

  • ISM Manufacturing 61.2 vs 60.9 f’cast, 60.7 prev

  • Construction issues 0.2 vs 0.5 f’cast, 1.0 prev

Summary of the market movement

8:43 am

Much weaker overnight, with most of the damage in low volume futures trading happening during Asian market hours. Things did not improve during the European hours or at the start of the national session. 8:20 am CME Open saw volume and sales increase, suggesting a positioning move in the “new month”.

12:17 pm

However, bonds rallied towards the end of the European trading session (though not necessarily because of it). 10 year yields now rose just 3.4 basis points to 1.615% and 2.5 UMBS fell less than an eighth a day.

3:14 pm

After a rally in the afternoon hours, bonds were flat in a very narrow area. The trading levels are the same as the last update, although MBS gained another tick (0.03) and is now only down 2 ticks (0.06) a day.