Perfect Storm Leaves Rate Range Perfectly Intact
Coming into the week, yields were near the top of a narrow range (3.4-3.56 give or take). With both ISM reports, the jobs report, and policy announcements from the Fed/ECB/BOE, it was a distinct possibility that we’d see that range broken. By Thursday morning, that looked like it was a work in progress, but by the end of the day, yields were back to 3.40. Then in a cruel twist of fate this morning, NFP beat forecasts by the widest margin in a year and half. 90 minutes later, ISM crushed its forecasts as well. These events combined to push yields right up to the top of the range, leaving us to hurry up and wait for the next set of potential market movers.
Econ Data / Events
517k vs 185k f’cast, 260k prev
3.4 vs 3.6 f’cast, 3.5 prev
0.3 vs 0.3 f’cast, 0.4 prev
ISM Non Manufacturing
55.2 vs 50.4 f’cast, 49.2 prev
Market Movement Recap
09:29 AM Heavy selling after massive NFP number. Perhaps finding footing now. 10yr yield up 11.2bps at 3.514. MBS down 3/8ths of a point in 5.0 coupons, and half a point in 4.5s.
10:05 AM More losses after ISM data. 10yr up 15bps at 3.552. MBS down 5/8ths of a point.
01:43 PM 10am marked the weakest levels and bonds have erased about half of the post-ISM losses. MBS trading flat with 5.0 coupons down just under half a point. 10yr up 11.5bps on the day at 3.517.