Big Market Reaction but Mortgages Outperform

Today's jobs report would have been bad for rates if it was even in line with expectations.  After it came out stronger than expected (especially in terms of the unemployment rate at 4.1 vs 4.3 f'cast), it was off to the races for bond sellers.  The short end of the yield curve has the most in common with Fed rate expectations, so it took the most damage, but MBS fared far better.  Perhaps that has something to do with the government not issuing MBS to fund the just-passed spending bill or perhaps it is a nod to next week's uncertain levels of demand for the scheduled Treasury auctions. Either way, we won't complain. Friday is closed for the holiday, and next week may as well be a holiday because everyone's waiting for July 15th CPI.