Ho Hum NFP Friday; MBS Outperform; 50 is The New 75

After being steadily crushed to the most inverted levels in 20 years, the yield curve was ready for a bounce today (i.e. shorter maturities were ready to outperform longer maturities).  This pattern often coincides with MBS outperformance and today was no exception.  The short end got a push from several Fed speakers who mentioned that 50bp hikes would still be historically fast and that traders could “pivot” their anxiety to focus on the eventual ceiling as opposed to how quickly we get there.  Meanwhile 10yr yields moved moderately higher, which is a decent enough result given the 260k vs 200k NFP beat.

Econ Data / Events

Nonfarm Payrolls

261k vs 200k f’cast
last month revised to 315k from 263k

Unemployment Rate

3.7 vs 3.6 f’cast, 3.5 prev


0.4 vs 0.3 f’cast/prev

Labor Force Participation Rate

62.2 vs 62.3 prev

Market Movement Recap

08:34 AM Bonds were modestly weaker overnight and are losing more ground after the NFP data.  10yr up 5bps at 4.2.  MBS down just over a quarter point.

09:07 AM MBS back to unchanged and 10yr only 1.4 bps higher at 4.16%.  

12:34 PM MBS holding in stronger territory, currently up 5 ticks (.16).  10yr yields up 1.8bps at 4.167.  Shorter-dated yields are outperforming.

04:04 PM MBS outperforming, still in positive territory, up a quarter point on the day, but just over an eighth of a point off the best levels.  10yr up 2.2bps at 4.171.
Source: Mortgage News Daily