Bond markets may well have been able to imagine a situation where NFP came in weak enough for some traders to doubt the Fed's resolve in hiking rates at the December meeting.  I personally think that number would have to have been shockingly low for such a thing, but now that doesn't even matter.  The number we ended up with left nothing to the imagination.  Here's a run-down:

  • NFP +271k vs 180k forecast
  • Revisions added a negligible 12k jobs to the past 2 months
  • Unemployment rate hit 5.0 vs 5.1 forecast/previous
  • Participation rate was unchanged
  • U-6 Unemployment dropped to 9.8% from 10.0% (first time under 10.0 since early 2008)
  • private sector 268k vs 165k forecast, 149k previously (revised up from 118k)
  • Hourly earnings +0.4 vs +0.2 forecast and 0.0 previously
  • Average workweek unchanged

Bottom line, this was an unequivocally heroic report in the same way the last report was unequivocally awful.  This data series has a tendency to pull this sort of stunt, with plenty of examples of precipitous changes being followed shortly thereafter by an equal and opposite reaction.

The key benefit of a report that was so universally strong is that it truly flushes out any traders who were clinging to the notion that the Fed wouldn't hike in December.  As such, we get to see the market's true colors. 

Of course those colors are red, but they're not exceptionally more red than you might imagine.  10yr yields are 'only' up 9.8 bps at 2.334.  This easily could have been 2.40 if traders were on the fence to the degree suggested by some of yesterday's analysis.  Fannie 3.5s are down "only" half a point at 103-08.  In other words, bond markets have done a pretty good job of pricing in December's rate hike reality.


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
99-31 : -0-21
FNMA 3.5
103-08 : -0-17
FNMA 4.0
105-29 : -0-12
Treasuries
2 YR
0.9020 : +0.0720
10 YR
2.3360 : +0.1000
30 YR
3.0940 : +0.0920
Pricing as of 11/6/15 1:15PMEST

Morning Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
8:31AM  :  ALERT ISSUED: Payrolls Crushes Consensus; Good Night Sweet Bond Market

Live Chat Featured Comments
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matt Hodges  :  "It's Google for Loan Officers™"
Hugh W. Page  :  "The other great value of this site. I can get an answer to a scenario question 50 times quicker than using my own company's resources :)"
Dan Clifton  :  "I have 2 monitors, MBS live is always on #2. it is the first website I open in the am"
Hugh W. Page  :  "MBS Live is awesome enough on it's own but to have the MND material behind it with Co-branded materials to share, and the shear quantity of info is simply amazing IMO."
Justin Heinz  :  "I am buying a house. Accepted offer over the weekend. Locked on Tuesday night because the info I got from this site and figured rates were going up with Yellen and NFP this week. Saved me an 1/8 in rate and some pricing."
Matt Hodges  :  "i taught a Realtor session yesterday... showed the screen - total street cred"
Joseph Daquino  :  "I got that $38.95 on Auto Pay.....don't even remember what card I put it on. All you have to do is pack your lunch 4 days a month for priceless knowledge."
Compliance is Watching Me  :  "just throw on the Gordon Gecko shirt, and represent!"
John Tassios  :  "i agree with Hugh. I've commented many times the value of this site goes far beyond just rates and MBS."
Andrew Russell  :  "SS, 100%. They think you are Wall Street savvy!"
Steve Schneider  :  "just having the charts up in the background when a client is in the office is like having "street cred." Gotta trust the guy with charts in the background!"
Compliance is Watching Me  :  "not to mention some entertainment value"
Compliance is Watching Me  :  "at least"
Compliance is Watching Me  :  "I get $38.95 worth of knowledge from this site daily."
Hugh W. Page  :  "I've been a member since the beginning and have not once even considered leaving."
Compliance is Watching Me  :  "let's face it, a large percentage of the LO's in this business will be gone when rates finally do move up and hold."
Jeff Anderson  :  "The benefits of this site are well beyond what I thought they'd be when I signed up."
Joseph Daquino  :  "The amount of knowledge that one gains from being a member here is priceless. Those that quit just don't understand and never will."
Compliance is Watching Me  :  "I am mostly purchase business, so I am not as rate sensitive as some may be, but I use this site religiously when talking to my clients."
Doug Seder  :  "AR - Agreed, took me a few years to become a MBSlive member, best decision ever !!"
Andrew Russell  :  "Best site, hands down, for the mortgage business...I am a member I think 7-8 years"
Matthew Graham  :  "http://www.mbslive.net you can also use your referral link under your profile on the top right (you get credit if he signs up)"
Justin Heinz  :  "MG another LO is in my office right now and is intrigued by the site. Is there a free trial?"
Oliver Orlicki  :  "Just quoted a client at 4.125 and he said that was really high and he is going to shop aroung"
Gus Floropoulos  :  "its a lot better than we want to admit in here because of our concerns of rates rising"
Matthew Graham  :  "It's just the way BLS works"
Chris Kopec  :  "I was guessing 230"
Matthew Graham  :  "well, 271k is pretty high, but I would have been surprised if it was under 200k"
Victor Burek  :  "how can you say that mg? No predictions were even over 200k"
Matthew Graham  :  "when you have 2 reports in a row that are outliers, the next report is usually a big swing in the other direction"
Matthew Graham  :  "not surprised at all"
Dmitriy S  :  "Winter is coming or has it "come"?"
Victor Burek  :  "I think everyone is surprised by that number as it beats the highest expectations by a lot"
Dmitriy S  :  "The writing was on the wall leading up to this. You had to be living under a rock if you were surprised by the #'s"
Scott Valins  :  "net revisions positive for previous two months but not by a lot"
Jeff Anderson  :  "We just got scapled."
Matthew Graham  :  "RTRS - U.S. OCT AGGREGATE WEEKLY HOURS INDEX FOR ALL PRIVATE WORKERS +0.3 PCT VS SEPT -0.2 PCT"
Matthew Graham  :  "RTRS - U.S. OCT AVERAGE WORKWK ALL PRIVATE WORKERS 34.5 HRS (CONS 34.5 HRS) VS SEPT 34.5 HRS (PREV 34.5 HRS), FACTORY 40.7 VS 40.6, OVERTIME 3.3 VS 3.2"
Matthew Graham  :  "RTRS - U.S. OCT GOVERNMENT JOBS +3,000 VS SEPT -12,000 (PREV +24,000)"
Matthew Graham  :  "RTRS - US OCT PRIVATE SECTOR JOBS +268,000 (CONS +165,000), VS SEPT +149,000 (PREV +118,000)"
Matthew Graham  :  "RTRS - U.S. OCT U-6 UNDEREMPLOYMENT RATE 9.8 PCT VS SEPT 10.0 PCT (PREV 10.0 PCT)"
Matthew Graham  :  "RTRS - U.S. OCT AVERAGE HOURLY EARNINGS ALL PRIVATE WORKERS +0.4 PCT (CONS +0.2 PCT) VS SEPT UNCHANGED (PREV UNCHANGED) TO $25.20 VS SEPT $25.11; OCT YEAR-ON-YEAR EARNINGS +2.5 PCT"
Matthew Graham  :  "RTRS - U.S. OCT JOBLESS RATE 5.0 PCT (CONSENSUS 5.1 PCT) VS SEPT 5.1 PCT (PREV 5.1 PCT)"
Matthew Graham  :  "RTRS - U.S. OCT LABOR FORCE PARTICIPATION RATE 62.4 PCT VS SEPT 62.4 PCT (PREV 62.4 PCT)"
Matthew Graham  :  "RTRS - U.S. OCT NONFARM PAYROLLS +271,000 (CONSENSUS +180,000) VS SEPT +137,000 (PREV +142,000), AUG +153,000 (PREV +136,000)"
Victor Burek  :  "•Bank of America 150K •BNP Paribas 150K •Morgan Stanley 165K •Deutsche Bank 175K •JPMorgan 175K •HSBC 175K •UBS 180K •Goldman Sachs 190K"