I have a lot of great thoughts and analysis about today's market movements.  Most of those were disseminated via MBS Live throughout the day--especially in the Huddle video--as well as via marketnewsletters.com.  (If you haven't tried MBS Live, you missed out today, and this month in general.  Check it out.  There's a free trial.  Let me know if you don't see how it will pay for itself over time and I'd be happy to walk you through it). 

Moving on to analysis...

This morning I said NFP didn't matter.  Bonds promptly underwent a vicious little sell-off immediately following NFP.  

Now this afternoon, I will tell you again that NFP didn't matter.  I'm not doubling down.  Here's why (in the simplest possible language I can think of):

NFP didn't conjure up the water.  It was simply a b.

Bonds didn't sell-off because of any implication from the NFP data.  I heard a lot of talk in the financial news and even among analysts about stronger wage growth numbers.  Poppycock!  The wage data was almost perfectly in line with forecasts.  The monthly growth was right on target.  Analysts called attention to the strongest year-over-year growth of the recovery.  Well duh!  All wages had to do for that to be the case was to merely fall in line with the median forecast.  This was an AS-EXPECTED result.

NFP is a market institution like no other.  It's the king of economic data.  It's in a period of subdued relevance because we all know the labor market is firing on all cylinders as far as economic data can convey.  NFP is a special moment each month that many traders will use as a staging ground for the execution of their next big trading idea.

While it wasn't necessarily obvious on the approach, hindsight makes it clear that the early February trade has been to sell bonds aggressively after being forced to hold more bonds at the end of January.  Lest ye think I'm saying that in light of today's move, it was the focal point of yesterday's analysis as well.  NFP has enough street cred that traders held back their selling on the chance the report bombed.  It didn't bomb, so the floodgates were open.  

We also happened to hit this morning on a technical ledge in yield curve trading.  NFP came out right as the curve was set to break above that ceiling.  The breakout brought extra volume and selling pressure in the morning.

All of the day's selling was accomplished in short order.  There were no new yield highs after 10am, but also no attempt to make new lows.  Things are bad and will continue to be bad until they get good again.  The first head-fake back in a good direction will be just that.  When we're really getting back to good, you'll know it, and I'll be talking about it.  


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 3.5
100-08 : -0-11
Treasuries
10 YR
2.8411 : +0.0681
Pricing as of 2/2/18 7:52PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
10:10AM  :  ALERT ISSUED: Snowball Selling Continues; Negative Reprice Potential For Some
8:38AM  :  ALERT ISSUED: Bonds Weaker After NFP, But Not Because of It

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "vehemently disagree"
Matthew Graham  :  "RTRS - FED'S WILLIAMS SAYS BOND MARKET'S RECENT MOVE A DELAYED ADJUSTMENT TO REALIZATION ECONOMY IS DOING WELL"
Matthew Graham  :  "RTRS - WILLIAMS SAYS EXPECTS INFLATION TO PICK UP THIS YEAR AND NEXT"
Matthew Graham  :  "RTRS - FED'S WILLIAMS SAYS NEED TO CONTINUE RAISING INTEREST RATES"
Matthew Graham  :  "RTRS - FED'S KAPLAN SAYS FRIDAY'S EMPLOYMENT DATA IS CONSISTENT WITH HIS VIEW THAT RATES SHOULD RISE GRADUALLY AND DELIBERATELY"
Matthew Graham  :  "no Scott. Bond traders are selling as fast as they want to, with little regard for anything but the issuance and MoPo outlooks"
scott weinstein  :  "Is it safe to assume we'd be even worse if stocks were up?"
Michael Gillani  :  "It doesn't look like this bond selloff is losing steam anytime time soon. It seems as though the intensity of continued selling will continue. Most analysts I've heard seem to think 3%+ on the 10 yr is the new normal. Atlanta Fed predicting 5.4% GDP 1st qtr. Economy is on fire as are global economies. More aggressive Fed hikes, inflation and foreign central bank easing make me feel like hoping for or anticipating a bounce anytime in the near future is setting yourself up for disapointment"
Manny Gomes  :  "there is a lot of money going to the sidelines today"
Ted Rood  :  "Shout out to MG for his take in Diane Olick's CNBC piece posted in newstream."
Matthew Graham  :  "ANYONE who is telling you rates are doing one thing for one reason deserves strenuous skepticism."