MBS RECAP: higher returns today, but next week is more important
Earlier this week there were “whisper” numbers suggesting outside-farm payrolls could get closer to 1 million, as opposed to the median forecast of 647,000. And that’s not too far from reality (916k). Unemployment fell. Participation has increased. The hours were way too high. At other points in economic history, that big blow would have made yields scream higher, but to date they have risen only moderately. It is unlikely to break above recent highs before the early 12pm close. In any case, we are still waiting for next week to cast the official vote on defending the 1.75+ 10 year yield cap this week.
Econ data / events
Fed MBS purchase 10 a.m., 11:30 a.m., 1 p.m.
Nonfarm Payrolls 916k vs 647k f’cast, 468k prev
U / E rate 6.0 vs 6.2
Participation rate +0.1
Working week 34.9 vs 34.7 f’cast, 34.6 prev
Market Movement Review
Fast but moderate weakness after the much stronger job report. 10 years results in 2 bit / s at 1.695. UMBS 2.5 fell an eighth to 102-19 (102.59) that day.
The bonds lost ground prematurely around 12 p.m., but not by much more than they had lost at the time of the last update. 10s ended 4 basis points at 1.714 and 2.5 UMBS fell a little more than an eighth point at 102-18 (102.56).
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