In a matter of 48 hours, Silicon Valley Bank has gone from being a company that we've never heard about or discussed to the highest profile bank failure since the Great Financial Crisis. Such developments sound like they should be good for bonds and today was no exception. The news certainly overshadowed today's jobs report although traders also looked willing to take that in stride (higher headline job creation offset by lower wage growth and higher unemployment). The net effect was the largest rally in 4 months and one of the 5 biggest rallies of the past decade--at least for Treasuries. MBS underperformed for reasons discussed in today's video.
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- Nonfarm Payrolls
- 311 vs 205 f'cast, 504 prev
- Wages
- 0.2 vs 0.3 f'cast, 0.3 prev
- Unemployment Rate
- 3.6 vs 3.4 f'cast, 3.4 prev
- Participation rate +0.1
- Nonfarm Payrolls
Big overnight rally, additional gains after NFP, but giving up those gains now. 10yr still down 9bps at 3.816. MBS up only an eighth, but there's roughly a quarter point separating buyers and sellers (i.e. MBS would be up more if the market were more liquid).
Additional gains after NYSE open. Best levels of the day with 10yr down almost 20bps at 3.712. MBS up at least half a point, but it's a moving target until liquidity improves.
Giving up some of the gains now. 10yr up 9bps from lows but still down 14.5bps on the day at 3.764. MBS up 3/8ths of a point.
Fairly sideways all afternoon. 10yr hovering near lows, down 21.2bps at 3.695. MBS up only half a point.
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