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Bonds Taking a Pre-NFP Lead-Off
Bonds Taking a Pre-NFP Lead-Off
Last Thursday, we discussed the paradox of a rally in the present moment being driven by future data. More specifically, the three downbeat labor market reports increased the stakes for tomorrow's jobs report. Depending on trends and trading positions, risks can be asymmetrical. A trader who expected higher rates might have only seen a modest increase in yields if the data was stronger, and a bigger decrease in yields if the data was weaker. The market already rejected a break above 4.30% in the 10yr. Then multiple reports suggested additional buying and additional risk of a weak jobs report. The choice to move back toward a familiar recent range (4.1-4.2) became clear with this morning's weak retail sales data. Just be aware that if Wednesday's jobs report is stronger, yields could pop right back over 4.20.
Gradually stronger overnight with additional gains after 8:30am data. 10yr down 5bps at 4.157 and MBS up 2 ticks (.06).
Additional gains. MBS up an eighth of a point and 10yr down 7.3bps at 4.135
Early Volatility And a Decent Recovery
| Time | Event | Period | Actual | Forecast | Prior |
|---|---|---|---|---|---|
| Tuesday, Feb 10 | |||||
| 8:15AM | ADP Employment Change Weekly | 6.5K | 7.75K | ||
| 8:30AM | Dec Retail Sales (%) | Dec | 0% | 0.4% | 0.6% |
| 8:30AM | Dec Retail Sales Control Group MoM | Dec | -0.1% | 0.4% | 0.4% |
| 8:30AM | Dec Import prices mm (%) | Dec | 0.1% | 0.1% | |
| 8:30AM | Q4 Employment costs (%) | Q4 | 0.7% | 0.8% | 0.8% |
| 10:00AM | Nov Business Inventories (% ) | Nov | 0.1% | 0.2% | 0.3% |
| 12:00PM | Fed Hammack Speech | ||||
| 1:00PM | 3-Yr Note Auction (bl) | 58 | |||
| 1:00PM | Fed Logan Speech | ||||
| Wednesday, Feb 11 | |||||
| 12:00AM | Roll Date - UMBS 30YR | ||||
| 7:00AM | Feb/06 MBA Refi Index | Feb/06 | 1269.7 | ||
| 7:00AM | Feb/06 MBA Purchase Index | Feb/06 | 165.4 | ||
| 7:00AM | Feb/06 Mortgage Market Index | Feb/06 | 330.8 | ||
| 8:30AM | Jan Unemployment rate mm (%) | Jan | 4.4% | 4.4% | |
| 8:30AM | Jan Non Farm Payrolls (k) | Jan | 70K | 50K | |
| 10:15AM | Fed Bowman Speech | ||||
| 10:30AM | Feb/06 Crude Oil Inventory (ml) | Feb/06 | -3.455M | ||
| 1:00PM | 10-yr Note Auction (bl) | 42 | |||
| 2:00PM | Jan Federal budget (bl) | Jan | $-86.5B | $-145B | |
| 7:00PM | Fed Logan Speech | ||||
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