Surprisingly Big Bond Rally Relative to The Data

Bonds went on a bit of a buying spree on Thursday. It was the biggest rally day since November, at least, and that’s impressive given the motivations. Specifically, there was a trifecta of downbeat labor market reports (Challenger, Jobless Claims, and Job Openings). Individually, none of these are worth a third of the move we saw today, but the whole was greater than the sum of its parts.  There’s also a 4th report being traded today: next week’s big jobs report. In other words, between yesterday’s ISM employment numbers and today’s reports, traders are taking a cautious lead-off ahead of the big jobs report. This raises the stakes for volatility next Wednesday morning. 

Econ Data / Events

Continued Claims (Jan)/24

1,844K vs 1850K f’cast, 1827K prev

Jobless Claims (Jan)/31

231K vs 212K f’cast, 209K prev

Market Movement Recap

08:32 AM Modestly stronger overnight with additional gains after AM data.  MBS up almost an eighth and 10yr down 4bps at 4.24

10:06 AM Additional gains after JOLTS data with 10yr down 5 bps at 4.228 and MBS up 5 ticks (.16).

01:09 PM Best levels of the day. MBS up a quarter point and 10yr down 7.1bps at 4.207