Minimal Selling Leaves Focus on CPI

The first order of business this morning was to reconcile the weaker NFP reading with the seemingly illogical bond market sell-off.  That was easy enough to do by the time we considered the solid drop in unemployment along with the big revisions to the past 2 months of payrolls. It was all the more palatable due to the modest size of the sell-off (especially modest as far as jobs report days are concerned). Thanks to the rally earlier in the week, bonds are still set to end the week at slightly stronger levels.  Bottom line, volatility is minimal. Next week’s CPI is the only other report that can hold a candle to NFP when it comes to rocking the bond market’s boat. 

Econ Data / Events

Nonfarm Payrolls

143k vs 170k f’cast, 256k prev, revised to 273k

Unemployment Rate

4.0 vs 4.1 f’cast, 4.1 prev

Participation Rate

62.6 vs 62.5 prev

Consumer Sentiment

67.8 vs 71.1 f’cast

1yr inflation expectations

4.3 vs 3.3 previously
big jump on tariff fears

Market Movement Recap

08:48 AM First move after NFP is weaker.  MBS down 5 ticks (.16) and 10yr up 3.7bps at 4.478

10:57 AM off the weakest levels after Trump’s reciprocal tariff headlines.  MBS still down a quarter point and 10yr up 4.8bps at 4.489

01:05 PM Classic PM sideways fizzle in progress.  MBS still down a quarter point and 10yr drifting sideways just under 4.50.