Mysterious Afternoon Gains Bring Yields Back Into The Range Just Before Jobs Report

It was a surprisingly and mysteriously decent day for the bond market (and even more decent for mortgage rates).  Unlike other days this week, overnight and early morning weakness was minimal.  Gains began ramping up right after the Jobless Claims data.  The direction of the move is no mystery, considering claims came in at 221k vs 214k, but the pace of the move is harder to explain.  Claims don't typically have as noticeable an impact.  No matter... yields drifted sideways to slightly higher into 2pm and everything seemed to make sense until another sharp little rally over the following 2 hours.  A big stock sell-off was clearly involved and perhaps some buzz surrounding geopolitical risks.  All told, it was enough to get yields back into the range that was broken on Monday (4.32% key level in 10yr) right before the jobs report flips a coin on another big breakout.  Of course if the coin lands on the other side, rates are more likely to take a friendly lead-off heading into next week's CPI.

Econ Data / Events
    • Jobless Claims
      • 221k vs 214k f'cast, 212k prev
    • Continued Claims
      • 1791k vs 1810k prev
Market Movement Recap
09:40 AM

Sideways to slightly weaker overnight. Stronger after data.  MBS up an eighth.  10yr down 3.2bps at 4.318

01:26 PM

Off the best levels with MBS up only 1 tick (0.03).  10yr 0.4bps higher at 4.354.

03:40 PM

Flight to safety surge in the PM with 10s down 4bps to the lows of the day at 4.31.  MBS up an eighth.

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