Bonds lost ground in the overnight session after Chinese regulators cautioned banks against holding US Treasuries. That move was short-lived and more than fully erased before 9am ET. Part of the bounce back can be attributed to a newswire quoting Hassett saying we should expect slightly lower jobs numbers. Some may view this as telegraphing advanced knowledge of Wednesday's numbers, but that would be highly unlikely based on the typical protocol (Council of Economic Advisors Chair typically gets advance notice the afternoon before a key economic report). It was also arguably taken out of context. The rest of the day was uneventful, sideways, and slightly stronger, with bonds ultimately ending at modestly lower yields. MBS were flat.
Modestly weaker overnight but mostly erased at 8:20am. 10yr up half a bp at 4.218 and MBS down 2 ticks (.06).
02:27 PM
Best levels of the day. MBS up 1 tick (.03) and 10yr down 1.3bps at 4.200
Lock / Float Considerations
The new week brings additional focus on Wednesday's jobs report (definitely already the focal point of any given month). Gamblers may feel like Hassett spilled the beans on Monday morning when he said we should expect slightly lower jobs numbers, but the associated newswire was largely taken out of context and could even be retrospective. Either way, Wednesday is the big potential volatility day this week.
