• Jobs reports generally don't move markets any more
• But they do when they're this far from the forecast
• NFP came in at 38k vs 164k
• This adds to confirmation that Fed cannot hike in June
• Rates adjust accordingly

Let's recap the last several weeks/months/(years?) in bond markets.  The focus is on the Fed's accommodation path.  Will they/won't they taper?  When will that happen?  How fast will it proceed?  When will they start talking about hiking rates?  When will they hike?  When will they hike again?  

There are many other tangential questions that can spawn from the above, but the core concept is simple: when is the cost of money going to change and by how much?

in mid-May the Fed gave markets a small wake-up call by sounding the alarm over June rate hike potential.  Markets got the message and rates adjusted accordingly.  Then the Fed began talking about the June 23rd Brexit (UK exiting EU) vote and the fact it might not be smart to hike at the June 15th Fed meeting, just in case Brexit really rattles financial markets.  Traders began decreasing bets on a June hike, which translated into longer term rates like mortgages mostly holding steady just under recent highs.

Today's jobs report was never destined to chime in on this debate.  The Fed and everyone else knows that payroll growth has been stable and strong for a long time.  Payrolls haven't translated to meaningful inflation so the only thing that might matter is if employment fell off a cliff.  Given that the forecast called for 164k jobs, and Yellen herself had said the Fed really only needs about 100k payrolls to make progress against unemployment, this NFP report was shaping up to be a snoozer.  Let's say a 64k payroll miss would have been fairly safe, even though it probably would have helped us make some token gains.

When it missed by nearly TWICE the safe amount, we were treated to much more than token gains.  The logic is fairly straightforward.  The Brexit narrative alone couldn't quite guarantee no hike in June, but taken in conjunction with today's jobs report, a June hike is all but off the table.  Bond markets adjusted accordingly (and quickly!), with 10yr yields dropping right to the bottom of the longer term range and MBS adding more than 3/8ths of a point.