Nothing Else Happened After Initial Selling

The typical early close for the bond market is 2pm ET. This is usually reserved for a holiday-adjacent day such as Christmas Eve or the day after Thanksgiving. Good Friday is unique. On years where it DOES NOT coincide with a jobs report, it’s fully closed. Otherwise, it’s open for a partial day, but only until noon ET instead of 2pm. That didn’t leave much time for anything else to happen this morning after the initial bout of moderate selling pressure.  It also discouraged trading volume in general–especially in light of other markets being fully closed. 

Econ Data / Events

Average earnings mm (Mar)

0.2% vs 0.3% f’cast, 0.4% prev

Non Farm Payrolls (Mar)

178K vs 60K f’cast, -92K prev

Participation Rate (Mar)

61.9% vs — f’cast, 62% prev

Unemployment rate mm (Mar)

4.3% vs 4.4% f’cast, 4.4% prev

Market Movement Recap

09:02 AM Weaker after jobs report. MBS down 10 ticks (.31) and 10yr up 4.2bps at 4.349

12:31 PM bonds closed now. Pretty flat all day after initial selling. MBS down a quarter point. and 10yr up 3.4bps at 4.341

Today’s jobs report is/was the only big-ticket calendar event and the most obvious source of bond market inspiration. That’s doubly true considering the even earlier-than-normal early close (12pm ET) for Good Friday. Payrolls were hot at 178k vs -133k previously.  The big swing is the first hint that payrolls should be taken with a grain of salt. Large swings were expected, to some extent, due to large strikes and the end of those strikes. Weird weather played a role to a lesser extent. Strikes aside, the market has shifted its jobs report focus more toward the unemployment rate over the past year or two due to rapid changes in the number of new payrolls required to sustain a flat unemployment rate. On that note, unemployment was decent, but not stellar (0.01% drop offset by a similar 0.01% drop in labor force participation). 10yr yields are 3-4bps higher as a result, which feels about right.
A caveat to all of the above: it’s a veritable ghost town in the bond market today.  Good Friday is normally a full holiday. Overseas TSYs were closed overnight. Many key players in MBS and TSYs are closed for the day. Volume is pitifully low.  We wouldn’t read anything into any bond market movement today unless an obviously huge war-related announcement comes out later. Even then, there are only 3 hours left to trade.

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Bonds were weaker to start the day with oil prices moving sharply higher after last night’s Trump speech. But a few hours into the trading session, the move was completely erased and reversed after some fairly simple headlines regarding Iran/Oman working on a resolution to open the Strait of Hormuz. Trump’s speech and the Iran/Oman news may as well have been the only two things that happened today because those were the only moments with any serious market movement. The jobs report is on deck for tomorrow’s holiday-shortened trading session.

Econ Data / Events

Challenger layoffs (Mar)

60.62K vs — f’cast, 48.307K prev

Continued Claims (Mar)/21

1,841K vs 1840K f’cast, 1819K prev

Jobless Claims (Mar)/28

202K vs 212K f’cast, 210K prev

Market Movement Recap

08:38 AM Weaker overnight after Trump speech and flat-ish since then.  10yr up 3.3bps at 4.35 and MBS down 7 ticks (.22).

10:28 AM Stronger after 9:30am NYSE open. MBS back to unchanged and 10yr down 1.6bps at 4.302

10:41 AM Additional gains after headline on Hormuz reopening headlines.  MBS up 3 ticks (.09) and 10yr down 2.4bps at 4.295

02:40 PM Super flat all afternoon.  MBS up 3 ticks (.09) and 10yr down 1bp at 4.309

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