Bonds got off to a weaker start today following 3 consecutive upbeat labor market reports (Challenger, ADP, and Jobless Claims). Yields managed to find a ceiling with the 10yr in the high 3.7s and ultimately made it back down to the low 3.7s by the close (only a few bps higher on the day). MBS made a similar recovery. Some sources cited "new year" inflows for bond funds. Comments from Fed's Bullard helped a bit as well. Still, the most important observation for today was the willingness to react to labor data because tomorrow's jobs report is an infinitely more tradeable event than today's 3 reports combined.
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- ADP Employment
- 235k vs 150k f'cast, 127k prev
- Jobless Claims
- 204k vs 224k f'cast, 223k prev
- Trade Gap
- -61.5bln vs -73.0 bln f'cast, -77.85bln prev
- ADP Employment
Mostly flat overnight but losing ground after AM data. 10yr up 6bps and MBS down about 3/8ths.
Additional weakness in MBS now, primarily a factor of illiquidity. 5.0 coupons down 18 ticks (.56). 10yr up 7.7 bps at 3.767.
Decent push back over the past half hour with 10yr yields now up only 4bps at 3.731. MBS are off the lows by about an eighth of a point, but still down 3/9ths on the day.
Bullard comments helped a bit. 10yr now up only 1.5bps on the day at 3.705. MBS down only an eighth of a point on the day.
MBS Market Alerts
