Every Bit the NFP Reaction We Expected


When it comes to bond markets reacting to economic data these days, don’t expect too much and you won’t be disappointed.  Heading into today’s NFP release, it didn’t make much sense to expect a major reaction, although there always tends to be more active trading in the few hours following the data.

That turned out to be exactly the case today.  Bonds began domestic hours in slightly weaker territory–largely as a carryover from yesterday afternoon’s weak momentum.  That’s not an analytical cop-out as much as it’s a comment on the absence of motivation in the overnight session and the gradual, thinly-traded nature of the weakness (i.e. move toward higher rates).

NFP came out with a stronger payroll count but with weaker wage growth.  Even in a month where it would be a bigger market mover, this still wouldn’t have been the report to do it (too equivocal).  Markets agreed and made sure to stay almost perfectly inside yesterday’s close and the overnight highs in yields for the rest of the day.  In that way, rates merely leveled off after yesterday’s push higher.

Next week brings inflation data, more potential tax bill developments, and a Fed Announcement.  The Fed will certainly hike, but markets will nonetheless tune in to see how the future rate hike outlook changes (it’s one of the 4 out of 8 meetings a year where forecast info is released).  

MBS Pricing Snapshot

Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.


FNMA 3.5

102-26 : -0-02


10 YR

2.3778 : +0.0018

Pricing as of 12/8/17 5:39PMEST

Today’s Reprice Alerts and Updates

10:45AM  :  ALERT ISSUED: Gradual Weakness Adding Up To Reprice Risk For a Few Lenders

8:45AM  :  NFP Produces Mixed Reaction in Bonds

MBS Live Chat Highlights

Sung Kim  :  “Early is when there is dew on the grass and frost on your windshield”

Matthew Graham  :  “define “early””

Nathan Miller  :  “early cocktails today?”

Peter McGoldrick  :  “Here comes Santa Claus, here comes Santa Claus right down Santa Claus Lane
Vixen and Blitzen and all his reindeer pullin’ on the reins
Bells are ringin’, children singin’, all is merry and bright”

Economic Calendar

Time Event Period Actual Forecast Prior
Friday, Dec 08
8:30 Private Payrolls (k)* Nov +221 190 252
8:30 Non-farm payrolls (k)* Nov +228 200 261
8:30 Average earnings mm (%) Nov 0.0
8:30 Unemployment rate mm (%)* Nov 4.1 4.1 4.1
10:00 1yr Inflation Outlook (%)* Dec 2.8 2.5
10:00 5yr Inflation Outlook (%)* Dec 2.5 2.4
10:00 Wholesale inventories mm (%) Oct -0.5 -0.4 -0.4
10:00 Consumer Sentiment Dec 96.8 99.0 98.5

Original Source