Solid Conclusion to a Solid Week. Has The Tide Turned?

After Thanksgiving week introduced a potential breakout from the recent uptrend in yields, this week kept hope alive.  It also kept us in suspense until today due to the jobs report.  Despite a decent facade (227k vs 200k f’cast), the closer one examined today’s jobs data, the weaker it began to look.  Markets agreed without much hesitation.  It wasn’t as if the data was downbeat enough for a massive rally, but we’d argue that today’s modest rally is still a great victory on a week where yields were already pushing the lowest levels since October 21st. Next week will be important in determining the endurance of this rally with Treasury auctions and inflation data.  The following week will set the tone for the end of the year with the Fed’s dot plot and rate announcement. 

Econ Data / Events

Nonfarm Payrolls

227k vs 200k f’cast, 36k prev

Unemployment Rates 

4.2 vs 4.2 f’cast, 4.1 prev

Participation Rate 

62.5 vs 62.7 f’cast, 62.6 prev

Consumer Sentiment

74 vs 73 f’cast

1yr inflation expectations

2.9 vs 2.6 prev

Market Movement Recap

08:54 AM Fairly flat overnight and modestly stronger after jobs report.  MBS up just over an eighth and 10yr down 1.8bps at 4.153

10:03 AM MBS now up a quarter point and 10yr down 3bps at 4.14

11:10 AM off the highs.  MBS now up only an eighth on the day and 10yr up .4bps at 4.175

04:40 PM Heading out near the day’s best levels.  MBS up a quarter point and 10yr down 2.3bps at 4.148