Yesterday's recap noted an increased risk of weakness today due to the technical bounce at 1.852. Here it is.
No, really, today is pretty much that simple. It would have taken some serious motivation for bonds to extent the rally any further ahead of NFP. Reason being: the mid 1.8 zone (1.84-1.86) is one of the most consistently relevant inflection points for 10yr yields in recent years. I went into greater detail on this in the Day Ahead. If you're interested in this technical level stuff, there's a good chart in that article.
If you're less interested in that technical stuff, suffice it to say that this morning's data combined with the strength of the existing rally made this a logical place to circle the wagons ahead of tomorrow's NFP. Jobless Claims haven't had much of an impact lately, but today's report was stronger than the average beat. In fact, claims were only 2k away from 15 year lows. Factory Orders at 10am were also much stronger than expected, effectively clearing the brush from the path of least resistance for today
Bottom line, whether technical or data-driven (take your pick, it doesn't matter), we simply have a bounce and consolidation ahead of NFP. It might not have happened if data objected, but that was far from the case.
MBS | FNMA 3.0 102-14 : -0-05 | FNMA 3.5 105-06 : -0-03 | FNMA 4.0 106-31 : -0-04 |
Treasuries | 2 YR 0.5440 : +0.0050 | 10 YR 1.8950 : +0.0360 | 30 YR 2.5100 : +0.0440 |
Pricing as of 4/2/15 12:53PMEST |