MBS Live: MBS Morning Market Summary
The morning thus far has been a fairly straightforward sell-off in response to much stronger-than-expected labor market data from this morning's Employment Situation Report.  Note the timestamp on the price table below at 11:09am with Fannie 3.0s down 13 ticks to 102-12.  At the moment, that's devolved to a 17 tick drop with prices at 102-08.  We've gotten another decent bounce at 102-06 lows, but even if those hold and we improve on 102-08, the sell-off is disconcerting because such levels are consistent with 3.0 MBS coupons decreasing in market share vs 3.5's, something we're already seeing on this morning's rate sheets.  Also disconcerting is the broader scope of the sell-off.  In reality, it began earlier in the week when 10's began moving up from 1.84 resistance.  There was little by way of economic justification for the move over 1.9 by Wednesday.  Moving up near 2% after yesterday's Jobless Claims and ECB press conference was more justified, but only if markets were hedging against a strong NFP print.  They certainly got it, and the damage would have been far worse than 17 ticks had we not lost the ground lost up until today.  In other words, today's sell-off was in progress for several days, and the stronger-than-expected print simply extends it to weaker levels.
MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
FNMA 3.0
102-12 : -0-13
FNMA 3.5
105-03 : -0-07
FNMA 4.0
106-07 : -0-05
FNMA 4.5
107-13 : -0-03
GNMA 3.0
103-21 : -0-11
GNMA 3.5
107-00 : -0-09
GNMA 4.0
108-14 : -0-02
GNMA 4.5
108-22 : -0-02
102-01 : -0-12
104-24 : -0-09
105-27 : -0-04
106-17 : -0-03
Pricing as of 11:09 AM EST
Morning Reprice Alerts and Updates
Below is a recap of instant Reprice Alerts and updates issued via email and text alert to MBS Live subscribers this morning.

9:36AM  :  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.
8:44AM  :  ECON: Nonfarm Payrolls Much Higher Than Expected
- NFP 236k vs 160k Consensus
- January revised to 119k from 157k, Dec up to 219k from 196k
- Construction Jobs rise most since March 2007
- Workweek 34.5hrs vs 34.4
- Unemployment Rate down to 7.7 from 7.8
- Private Payrolls +246k vs 140k in January
- Service Producing category +179k vs +99k in January
- Professional/Business +73k vs +16k in January

- Market Reaction: Not pretty for bond markets... MBS down 18 ticks, 10's up 9 bps...

Total nonfarm payroll employment increased by 236,000 in February, and the unemployment rate edged down to 7.7 percent, the U.S. Bureau of Labor Statistics reported today. Employment increased in professional and business services, construction, and health care.
Live Chat Featured Comments
A recap of the featured comments from the MBS Live Dashboard's Live Chat feature, utilized by hundreds of industry professionals each day.

Edgar  :  "Brayden...agreed. I don't think LOs that say they wouldn't mind higher rates have really thought about the implications and how they would get their borrower's qualified. In CA....I hit a 40-45% DTI on 80-90% of my deals. Jack up rates to 5% and it kills every loan officer's pipe in CA. If DTis get lowered to 40%....another pipe killer."
Brayden Alexander  :  "we simply can not have rising rates + rising value but declining DTI parameters and tougher guideline. It is an equation that doesnt work."
Scott Valins  :  "silver lining: no signs of capitulation today"
Edgar  :  "A jump to the mid 4's and you can cancel the housing recovery. DTIs would be the issue and would not surprise me if max DTIs go lower this year. "
Brent Borcherding  :  "Just for fun. Let's assume low rates have helped improve the economy & that the economy and housing are truly in a nice recovery. At what point would rising rates reverse the course. Treasury yields at 2.5% 3%? Mortgage Rates at 4% 4.5% 5%???"
Matthew Graham  :  "you forgot to finish the first sentence SR... stagnant at 5yr+ highs in S&P and all time highs in Dow... so you really gonna read a lot into them being stagnant? they have 200k+ NFP prints priced into their version of reality"
Scott Rieke  :  "thus far we haven't reached a convexity point where real$ accounts get sucked in and draw the move out"
Scott Rieke  :  "volume non-existent"
Scott Rieke  :  "equities are stagnant"
Andy Pada  :  "no more wishful than denying the strength of this jobs report. But that being said, this number has been priced into equities."
Andy Pada  :  "Just keep in mind, that this number will feed the Fed exit dialogue."
Oliver S. Orlicki  :  "That number was huge and the markets are going to continue to soar"
Scott Rieke  :  "see if there is momentum behind this"
Jeff Anderson  :  "So 196k in Dec then 119k in Jan and 236k for Feb. so 183k ave. next month will be interesting. So 183k is a net positive compared th the b/d rate if they still pay attention to that."
Victor Burek  :  "futures arent soaring, only up about about half a point"
John Tassios  :  "on top of all this pain today we also have rollover tonight / may test at or below 102.00 level in 3.0 MBS Bond"
MMNJ  :  "typically we see the biggest jumps or drops first 15 mins after #, then stabilization. Hoping we hold around -15 then slow steady climb once numbers are digested"
Victor Burek  :  "if you dont look at revisions its pretty solid"
Christopher Stevens  :  "based on the current market I would say best ex will be holing on for dear life and 4% is saying hello"
Christopher Stevens  :  "MG- nice call in your Day Ahead "Then again, the past two March reports have beaten big (both vs consensus and vs ADP), and that upper trendline in the chart above looks dangerously close if that happens for a third year""
Joseph Watts  :  "Equities are almost out of steam. This run up has occurred just about this time every year for the past few and then pulls back starting in April."
John McClellan  :  "good economy = housing demand"
Matthew Graham  :  "private +246k"
Matthew Graham  :  "gov't jobs -10k"
Brent Borcherding  :  "Good call, MG."
Andy Pada  :  "decline in government jobs on state level"
Andy Pada  :  "private payrolls"
Matthew Graham  :  "I think it's more like conclusions have been made and this one month isn't the one that refutes them..."
Scott Valins  :  "don't make conclusions from 1 month guys"
John Tassios  :  "Theres goes any hope for green........"
Matthew Graham  :  "RTRS- U.S. FEB AVERAGE WORKWK ALL PRIVATE WORKERS 34.5 HRS (CONS 34.4 HRS) VS JAN 34.4 HRS (PREV 34.4 HRS), FACTORY 40.9 VS 40.7, OVERTIME 3.4 VS 3.3 "
Matthew Graham  :  "RTRS - U.S. FEB NONFARM PAYROLLS +236,000 (CONSENSUS +160,000) VS JAN +119,000 (PREV +157,000), DEC +219,000 (PREV +196,000) "

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