Bond markets experienced a quintessentially volatile reaction to a classic example of a "big miss" in the NFP data.  As we've discussed several times already today, there was nothing positive about the data.  In fact, my initial assessment this morning was that "The normal silver linings that econo-bulls normally rely upon to make their counterarguments on TV are all completely absent."

The reasons for this were simple.  The normal "yeah buts" are as follows.

• The headline NFP was weak... yeah but the unemployment rate dropped! (it didn't drop)
• The unemployment rate didn't drop... yeah but labor force participation increased! (it actually decreased)
• Unemployment didn't drop, the participation rate increased, payrolls shrank... yeah but at least people are working more hours and making more money!  (nope, no they aren't... Hours and Wages both fell and both missed expectations).
• Ok ok ok.. NFP was weak... yeah but Private Payrolls were stronger!  (No, no they weren't.  They actually fell more than NFP).

​For all these reasons, the first move of the day was a no-brainer.  Bonds surged to their best levels in more than 5 months.  But then--as bond markets are reasonably fond of doing on NFP Friday afternoons--the paradoxical knee jerk ensued.  More than half the gains evaporated by 2pm.  

All I can say is this...

​Look at the day as a whole, and in the bigger picture.  Keep in mind that we've BEEN rallying into this NFP release and several of those rally days looked to be losing steam recently.  If you weren't aware of this morning's rally levels, the end-of-day levels not only don't look so bad, they're arguably very much in line with where we should be.  We'll really have to wait and see how this plays out next week before freaking out too much.  I will say that the double bounce at 1.905 is a bit ominous.  ​We'll discuss the technical implications next week.