Why Stronger Jobs Data Gave Way to a Rate Rally

Anything over 300k is big number for nonfarm payrolls.  Today’s number was 315k.  So why were rates able to rally in a reasonably big way after the data?  There are a few different reasons–all of them covered in today’s video.  One of the best is that rates were prepared for the worst.  That’s what the entire last month has been about.  There were also a few holes to be poked in the labor market message, but those seem secondary to the mere “sigh of relief” that the data didn’t offer any surprises like those seen last month.  Rates are still high overall and momentum is still data dependent.  Today just happened to be a nice little victory.

Econ Data / Events

Nonfarm Payrolls

315k vs 300k f’cast, 526k prev

Unemployment Rate

3.7 vs 3.5 f’cast, 3.5 prev


0.3 vs 0.4 f’cast, 0.5 prev

Participation Rate

62.4 vs 62.1 prev

June NFP revised down to 293k from 398k

Market Movement Recap

08:42 AM Mixed reaction in bonds to a very mixed jobs report.  10yr was slightly stronger, but now up half a bp at 3.263.  MBS are still up almost an eighth.

09:52 AM Bonds erring on the side of gains now, with 10yr down 5.6bps at 3.203 and MBS up nearly 3/8ths of a point

11:07 AM Gains leveled off after the last update.  MBS are up just over a quarter point and have generally been trading flat for the past hour.  10yr yields are down 5bps at 3.21.

11:46 AM Giving up some gains now with MBS off a quarter point versus highs.  10yr yields are up 7bps from the lows (roughly), but still down 2.2bps on the day at 3.237.

02:39 PM Weakness has been shaken off.  10yr yields near lows of day, down 6bps over at 3.201.  MBS are back near highs, up 10 ticks (.31) at 99-12 (99.375).

05:34 PM MBS out the door at the highs of the day (and notably, the lowest levels in 2 months apart from that past 48 hours) with 4.5 coupons up 13 ticks (.41).  10yr yields coasted sideways just under 3.20 in the final hour.
Source: Mortgage News Daily