Jobs Data Poised to Influence Size of The Upcoming Rate Cut
Thu, Sep 5 2024, 4:54 PM
MBS Recap
Jobs Data Poised to Influence Size of The Upcoming Rate Cut
MBS Recap Matthew Graham | 4:53 PM
Jobs Data Poised to Influence Size of The Upcoming Rate Cut
Thursday ended up being fairly uneventful for bonds, with the balance of data leaving us slightly better off. ADP employment had the biggest positive impact and the selling pressure created by ISM Services was ultimately unable to argue a better case. Friday's jobs report will offer a final ruling of sorts. It will decide whether the early September rate rally will continue and it will also inform the odds of a 25bp vs 50bp rate cut from the Fed in 2 weeks. The range of potential bond market reactions are only limited by the data's ability to exceed or fall short of forecasts. Potential volatility is as high as it's been since the beginning of August.
Flat overnight and stronger after ADP. 10yr down 1bp at 3.746 and MBS up 2 ticks (.06).
10:07 AM
Weaker after ISM data (but still barely green on the day). MBS up 2 ticks (.06) and 10yr down 0.2bps at 3.752
10:57 AM
Now decidedly weaker with MBS down 2 ticks (.06) on the day and 6 ticks (.19) from the highs. 10yr up 1.1bps at 3.767
03:34 PM
back near stronger levels. MBS up 3 ticks (.09). 10yr down 2.3bps at 3.732
Lock / Float Considerations
On the Thursday before a Jobs Report Friday, there's never a secret report that clues anyone in to the impending bond market reaction. This time around, there's almost certain to be at least a moderately big reaction, and there is a decent chance that it will be the most volatile day for bonds since the beginning of August. Again, there's an equal chance of that volatility resulting in higher or lower rates. Betting on one or the other is truly a coin flip.
