The first two days of the new year were shaping up to paint an unpleasant picture for the bond market in which the strong rally in Nov/Dec faced the prospect of technical correction. That risk remained through the first few hours this morning, but things began to change after the JOLTS data (not at first, but eventually!). As losses turned to gains in the afternoon we had fresh proof of concept for the prevailing "data dependent" narrative for rates. JOLTS wasn't even bad, per se, it was merely the first time we've seen consecutive months under 9m since job openings were still on the way up in 2021. At the risk of reiterating the obvious, Friday's jobs report will tell us even more about data dependency. On a side note, Fed Minutes helped--primarily due to the nod to an eventual winding down of quantitative tightening (something that came through better in today's minutes than in the press conference 3 weeks ago).
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- Job Openings (JOLTS)
- 8.79m vs 8.85m f'cast, 8.852m prev
- ISM Manufacturing
- 47.4 vs 47.1 f'cast, 46.7 prev
- Job Openings (JOLTS)
More overnight weakness. 10yr up 5.2bps at 3.993. MBS down a quarter point.
brief recovery after 10am data, but now back to weaker levels. 10s up 4.7bps at 3.988 and MBS down 3/8ths.
Nice mid-day rally. 10s down 2.3bps to 3.918. MBS now unchanged on the day.
Gains maintained after Fed Minutes. 10yr down 3.2bps at 3.909. MBS up 1 tick (0.03).