Rates Defeated by Data. Another Big Fight Next Week

This week’s recap is fairly straightforward.  Rates were at the bottom of what was probably going to turn out to be a sideways range.  Economic data was strong enough to remove any doubt of that range being broken.  ISM on Wednesday and Jobs on Friday took turns pushing bond yields back up into the middle of June’s exceptionally wide range.  10s ultimately moved up to 3.08+ and MBS lost the better part of a point from last Friday. It’s hard to say exactly how much credit to give data versus technicals, but it’s very easy to say that next week’s CPI data will be the next major focal point for rate momentum. 

Econ Data / Events

Nonfarm Payrolls    -372k vs 268k f’cast, 384k prev Wages    -0.3 vs 0.3 f’cast, 0.4 prev (revised up 0.1) Unemployment Rate    -3.6 vs 3.6 f’cast/prev participation rate    -62.2 vs 62.3 prev

Market Movement Recap

08:50 AM Flat to slightly stronger overnight, then sharply weaker after jobs data.  10yr up 8bps at MBS down just over half a point.

10:30 AM MBS bouncing back nicely from initial post-NFP sell-off.  4.5 coupons now down only 6 ticks (.19).  10yr is underperforming, regaining less than half of the losses, currently still up 5.6bps at 3.06%.

01:12 PM Bounce attempt failed and Treasuries are back near weakest levels.  MBS are outperforming, but still down 3/8ths of a point on the day.  10yr yields are up 9bps at 3.091.

04:46 PM Very flat, all afternoon, with MBS and Treasuries both almost perfectly in line with the same levels from 3 hours ago.  That’s it for this week! Rates lose, but live to fight another Wednesday (next Wednesday = CPI)