Fighting To Establish A Defensive Range Post-NFP Sell-Off
Any overnight action that we'd normally recap is essentially irrelevant compared to the post-NFP sell-off and the struggle to establish a defensive perimeter after moves that have varried from 12 to 18 ticks worse on the day since the initial free-fall. 10yr yields have been up between 7 and 10bps depending on when you look.
For those in the field this morning or otherwise not glued to a screen for NFP, NFP was unfriendly for bond markets, significantly beating expectations (+236k vs 160 consensus). Bond markets sold off abruptly, as would be expected on the heels of such data, but thus far, haven't exceeded their first price troughs.
For Fannie 3.0s, that was 102-07 and 10yr Tsys, 99-07 (or 2.085 in terms of yield. There really isn't a lot to be said to mitigate the strength of the data, so the push back here can be assumed to be an organic sort of support level based on tradeflows and technicals. 2.085 is perfectly in line with the upper limits of the longer term uptrend in rates. Breaking decidedly higher beyond that would be disconcerting.
But for now, 10's and MBS are hanging tough inside their weaker levels of the morning. We'll see how that plays out as equities open up into new 5yr highs in the S&P and again when European markets close at 11:30. There is one more economic report out this morning--Wholesale Inventories at 10am--but it's not a market mover on NFP day, especially when there's a big beat and a big move.
Fannie 3.0s are currently down 15 ticks on the day at 102-10 and 10yr yields are up 6.61 bps at 2.0611. S&P's are up 4 pts at 1551, and bond markets did very little to react to the initial opening bell gyrations.