It was a super interesting day for the bond market. Yields rose to the week’s highs overnight as oil prices continued to surge. We knew we’d get at least some sort of reaction to any big beat/miss in the jobs report and today’s miss was certainly big. At first, the reaction was logical. Bond rallied. But the paradox set in quickly and yields hit new highs by 9:30am. Fed funds futures continued arguing for a bond rally, as did lowest S&P levels since November. One could say “bonds finally came to their senses,” or “the initial selling was a quick bout of profit taking,” but no explanation would have been obvious upfront. Since 9:30am marked the shift, we’d have to go with the vague “positional considerations” and stock market safe haven excuses. Either way, with bonds ending up flat despite oil cracking $90/bbl, it was good enough.
Econ Data / Events
Average earnings mm (Feb)
0.4% vs 0.3% f’cast, 0.4% prev
Non Farm Payrolls (Feb)
-92K vs 59K f’cast, 130K prev
Participation Rate (Feb)
62.0% vs — f’cast, 62.5% prev
Retail Sales (Jan)
-0.2% vs -0.3% f’cast, 0% prev
Retail Sales Control Group MoM (Jan)
0.3% vs 0.2% f’cast, -0.1% prev
Unemployment rate mm (Feb)
4.4% vs 4.3% f’cast, 4.3% prev
Market Movement Recap
08:16 AM Additional weakness overnight amid ongoing oil surge. MBS down an eighth and 10yr up almost 3bps at 4.164
08:35 AM post payrolls, 10yr yields down 1.5bps at 4.121 and MBS up 2 ticks (.06).
10:09 AM Big reversal into weaker territory. MBS down 6 ticks (.19) and 10yr up 4bps at 4.176
11:59 AM Nice recovery with MBS down only 1 tick (.03) and 10yr down 0.3bps at 4.133
02:03 PM Best levels of the day. MBS up 2 ticks (.06) and 10yr down 2.3bps at 4.113
03:21 PM Off the best levels now with MBS down 2 ticks (.06) on the day and just over an eighth from the highs. 10yr roughly unchanged at 4.138