Another first Friday of the month, and another NFP has the chance to send bond markets in either direction.  It seems like NFP (so named for the report's chief component, Nonfarm Payrolls) is always billed as a big market mover, largely because it always can be.  In fact one point I like to make on MBS Live is that for any given month, if you look back and see a big move in one direction on an NFP day, that has a better-than-random chance of setting the tone for the entire month.  A case could certainly be made that the weak NFP at the beginning of January helped set the strong tone for bond markets since then.

Granted, there were other factors in play over the past month, but NFP was the first and biggest single market mover.  That's part of what makes today interesting because any time we have these big beats or misses in the previous month, the current month has a chance to confirm or refute that craziness.  We saw a memorable example of this on May 3rd 2013 when an incredibly weak reading in April was revised much higher and the new reading on May 3rd was much higher as well.  Markets turned on a dime and never looked back.

We're not likely being set up for anything remotely as abrupt as that this time around, but the far-from-consensus reading last time makes the stakes bigger this time.  Additionally, the series itself is sort of on the edge at current levels.  In other words, another similarly weak reading could send a distress signal about the economy while a strong reading could be a sign that we're not flagging as badly as some of the data has recently suggested (the weather seems like it might be mentioned in such a scenario).