When does an obviously poor job report cause bonds to lose ground? We already know the answer (spoiler alert: it’s “today”), but the reasons for the answer are partly up for debate. The focus of the morning comment was on charting most of these reasons, but as the day progressed, MBS outperformance helped make one of the factors even more prominent. We’ll discuss that in addition to all of the other charts in today’s video.

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

  • Payrolls outside agriculture 235k vs 728k f’cast, 1,053m prev

  • Unemployment rate 5.2 vs 5.2 f’cast, 5.4 prev

8:37 am

A little weaker overnight, then a paradoxical reaction to the weak job data. Bonds tried to rebound for a minute or two but are now at their weakest levels of the day, up 3.1 basis points to 1.316% over the 10 years and down an eighth point from MBS.

11:45 a.m.

Bonds stopped the bleeding after the initial sell-off. MBS is still an eighth in the red. 10-year yields sideways about 4 basis points higher (1.324%) after being 5+ basis points higher (1.336%) at the weakest levels

4:24 pm

It is significant that we only have 3 bullet points in this section of a vacancy report on Friday. It suggests it all happened in less than 30 minutes this morning and nothing has really happened since then (unless you want to count the modest MBS outperformance, which is sure to be “nice”). 10 year return = 1.324% still. MBS is now only down 3 ticks (0.09).