Bonds made it through the jobs report in good shape with modest gains intact heading into the PM hours. Things changed after that, with the most obvious turning point coinciding with Fed Chair Powell's speech. If traders had been hoping to hear Powell express some concern over economic momentum, they were disappointed when he said "the economy is fine. It doesn't need us to do anything, really." With that, bonds moved into negative territory and Fed Funds Futures moved back near the week's weakest levels (indicating slightly lower odds of the next rate cut happening in May).
slightly stronger to start with additional gains after NFP. MBS up almost a quarter point and 10yr down 5.2bps at 4.218
01:49 PM
swooning now after consolidating into the noon hour. MBS down 3 ticks (.09) and 10yr up 3.5bps at 4.306
03:49 PM
Slightly weaker and now holding mostly sideways. MBS down 5 ticks (.16) and 10yr up 4.5bps at 4.316
Lock / Float Considerations
Taken together, the past 4 days suggest the bond market is experiencing some genuine resistance to the prevailing rally momentum. It's a good time for the less aggressive floaters to consider locking. Aggressive floaters may choose to wait for more weakness before getting to the next high consequence economic data (Wednesday's CPI).
