The labor market has been the last bastion of defense against the various threats to the current economic expansion.  Inflation may be intractable.  Global growth may be a concern.  But don't try to tell me a recession or even a contraction is in the cards with the average NFP number hanging out around 200k and an unemployment rate under 4%!

After today, we have 2 NFP readings in the past 4 months falling well under 100k for the first time since the labor market crawled out of its hole in 2011-2012.  Combine that with already-swirling fears about global growth, trade wars, and other sectors of the domestic economy and it makes some sense that investors are starting to get nervous.  In fact, they were clearly nervous BEFORE this morning's jobs report if Fed rate cut expectations were any clue (a full rate cut is priced in to swap markets for July) and the hard data merely validated the fear.

This definitely could have gone the other way had the number been stronger than expected.  To be sure, bonds are in overbought territory and could easily be coaxed into a bit of a selling spree if they encounter the wrong combination of data and events.  But as we sometimes discuss, that scenario is so obvious that we can assume an abundance of traders were positioned for it.  Then days like today happen and that hoard of traders is forced to capitulate (i.e there were lots of short positions forced to cover).

MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
FNMA 3.0
100-22 : +0-10
10 YR
2.0840 : -0.0390
Pricing as of 6/7/19 5:34PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
11:52AM  :  ALERT ISSUED: Negative Reprice Risk Increasing
8:36AM  :  Bonds Rally on Weak NFP

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
John Tassios  :  "Jamie Dimon CEO JPM - " low yields are gone, i'm looking for 3.75% or more. JPM bond traders earlier this morning - we revised our forecasts to now show 2 rate cuts and 1.75% yields"
John Tassios  :  "bandwagon low yield jumping time. Same "analysts" who 1 year ago were saying 30 year bull run in yields was coming to an end with 3.5% to 4% yield forecasts @2cents"

Economic Calendar
Time Event Period Actual Forecast Prior
Friday, Jun 07
8:30 Non-farm payrolls (k)* May +75 185 263
8:30 Unemployment rate mm (%)* May 3.6 3.6 3.6
15:00 Consumer credit (bl) Apr 17.50 12.00 10.28