Bonds definitely paused their long term relationship with economic data in wake of the tariff announcement in early April, which was logical given the headline-drive volatility and uncertainty. 2 weeks ago, the connection looked to be returning. Now over the past 2 days, it's back with a vengeance. It's not that any of the data has been stunningly strong, but it's been much better than what some market participants were prepared to see. Friday's jobs report is the 2nd time in 2 days where traders have been able (or forced?) to reconcile their more dire fears with a less dire reality. Translation: higher stocks, higher yields. More big ticket data on the way on Monday...
Losing some ground after jobs report. MBS down about an eighth and 10yr up 5.5bps at 4.271
11:31 AM
More selling. MBS down just over a quarter point and 10yr up 8.8bps at 4.305
12:06 PM
More weakness. 10yr up 10.6 bps at 4.323. MBS down 9 ticks (.28).
03:57 PM
Off the weakest levels, but still weak. MBS down a quarter point and 10yr up 9.3bps at 4.31
Lock / Float Considerations
Friday's jobs report reiterated the bond market's re-connection to big ticket economic data, even if the example was an unpleasant one. The recent range suggests there's room to move in either direction depending on data, and Monday brings another big ticket report. Translation, risks remain higher than normal with respect to floating.
