This morning's trading--both before and after NFP came out--basically acted as additional time for debate.  Both MBS and Treasuries bounced quickly, but symmetrically around yesterday's closing levels before finally choosing a direction.  Actually, the direction may have been chosen for them to some extent, as it was the stock market that made the first move.

To bonds' credit, they didn't lose their cool in the first hour and a half of trading as stocks moved higher.  Once it became clear that equities were heading down and out, bonds finally followed.  10yr yields hit their lowest closing levels since late August.  MBS haven't bounced back quite as much relative to late-summertime levels, but they're getting close.

NFP itself didn't seem to matter much, although I suspect that would have been different if it was clearly much weaker or stronger.  As it stands, the miss in the payroll count (155k vs 200k) was the only real gripe, and that's not even a big miss by historical standards.  With unemployment holding at a low 3.7%, and average hourly earnings holding 3.1% year-over-year, this wasn't anywhere close to the confirmation of a major economic shift that some investors were worried about (or hoping for, in the case of interest rate bulls).

One step at a time from here on out as we see where 2018's strongest bond market momentum takes us.  Expect a token bounce soon--at least for one day.  It's what happens afterward that will be the most telling.


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 4.0
101-08 : +0-06
Treasuries
10 YR
2.8560 : -0.0200
Pricing as of 12/7/18 4:22PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
8:38AM  :  Bonds Not Keen to Rally on Weaker-But-Decent NFP

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "RTRS - BULLARD SAYS REVISIONS TO COMMON MONETARY POLICY RULES SHOW FEDERAL FUNDS RATE ALREADY ABOVE NEUTRAL"
Matthew Graham  :  "RTRS - BULLARD, A VOTER ON POLICY FOR 2019, SAYS SUBDUED INFLATION EXPECTATIONS IN FINANCIAL MARKETS AMONG REASONS TO PAUSE"
Matthew Graham  :  "RTRS - ST. LOUIS FED'S BULLARD REPEATS CALL FOR FED TO HOLD RATES STEADY"
John Tassios  :  "per Bullard comment, not a god idea for FED to not raise in Dec. they will loose credibility and increase mkt volatility. Inverted yield curve is not in their mandate. Only employment and Inflation is in their mandate.@2cents"

Economic Calendar
Time Event Period Actual Forecast Prior
Friday, Dec 07
8:30 Non-farm payrolls (k)* Nov +155 200 250
8:30 Unemployment rate mm (%)* Nov 3.7 3.7 3.7
10:00 1yr Inflation Outlook (%)* Dec 2.7 2.8
10:00 Consumer Sentiment Dec 97.5 97.0 97.5
10:00 5yr Inflation Outlook (%)* Dec 2.4 2.6