In the constantly-evolving modern era of market-watching, it's rare to see simply, old-school "cause and effect" relationship between data and market movement play out, but today was textbook.  Bonds were flat throughout the overnight session, clearly waiting for the 8:30am NFP data.  The data had no glaring weak points, thus leaving the focus on the big 255k vs 180k 'beat.'

Normally, we'd be able to say something about the revisions detracting from the beat or a decrease in wage growth, but no such luck today.  Bonds sold-off quickly with 10yr yields immediately seeking out the 1.54 pivot point (yields had orbited 1.54 on Tuesday and Wednesday, and had spent half of July trading it as the floor in a very narrow range).  This "once floor" didn't prove to be a "future ceiling" today.  Instead, yields continued right to 1.59--incidentally the ceiling of that same mid-July range.

In the sense that rates held under that previous ceiling, today could have been worse.  That said, an 8.8bp increase in yields in one day is fairly brisk, and we wouldn't necessarily have expected a strong NFP to push rates up any more quickly in one day.  This leaves us to wonder if today was only the beginning of a new trend toward higher rates that only had so much time to do its thing in the current week.


MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
MBS
FNMA 3.0
103-21 : -0-11
Treasuries
10 YR
1.5900 : +0.0880
Pricing as of 8/5/16 6:38PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
2:13PM  :  ALERT ISSUED: Negative Reprices Increasingly Likely
10:19AM  :  ALERT ISSUED: Negative Reprice Risk Increasing For Some Lenders
8:33AM  :  ALERT ISSUED: NFP Crushes Consensus; Bonds Tank Immediately, But Losses Contained For Now

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "last Friday being month-end made Monday a bit riskier, so indeed it was a good day."
Dominick Cordone  :  "my thought is always- why waste 2 of your days on the initial lock right off the bat"
Mike Tavani  :  "i thought last Friday was a great day to lock"
Matthew Graham  :  "nothing to understand. Just another 50/50 thing that some people are more vocal about than others."
Matt Hodges  :  "i think the belief is more can happen overseas on weekends so secondary holds back on pricing on Fridays"
Mike Tavani  :  "Anyone care to explain the logic?"
Mike Tavani  :  "i don't understand the no lock on Friday thing"
Matt Hodges  :  "i may lock two today - clients call."
Adrian Webb  :  "Matt, you feel like we the damage is done? Holding off till next week to lock a few I guess. :)"
Matt Hodges  :  "nothing truly bad happened today, and it's Friday, so we can live to fight another day"