"Nonfarm payroll employment fell sharply (-533,000) in November, andthe unemployment rate rose from 6.5 to 6.7 percent, the Bureau of LaborStatistics of the U.S. Department of Labor reported today. November'sdrop in payroll employment followed declines of 403,000 in September and320,000 in October, as revised. Job losses were large and widespreadacross the major industry sectors in November."-NBER

This is much worse than expected, and is one of those MBS-related data puzzlers. We've been conditioned to believe that weak economic data generally leads to improved MBS prices. It's true that this has been the case for mostof recent memory. However, especially during the current recession we've seen negative economic data have a bit of a paradoxical effect from time to time. Although much remains to be seen regarding the reaction to the dismal NFP, it is possible we'll see a reaction similar to other recent equally awful numbers, which is a sort of indifference.

So far, despite a bit of that indifference being evident in slightly wider spreads,MBS have rallied a few ticks off the data, coming from around 101-03 to 101-08.This puts us flush with yesterday's "going out" levels. Assuming a ststus quo from here to the release of your rate sheets,this would bode well. Sure, maybe not "well" in the sense of massive gains, but perhaps a little, and certainly not losing anything.

So the Float Boat, though an old friend, is feeling "exciting and new" again today. Come aboard! We've been expecting you!