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Massive Miss in NFP. So Why Aren't Bonds Improving?
Massive Miss in NFP. So Why Aren't Bonds Improving?
It's shaping up to be a frustrating day market watchers. Decades of experience tells us that bonds should rally fairly sharply on a day where nonfarm payrolls miss the forecast by the widest margin in more than a year. At -92k vs +59k, today fits that bill. And like you'd expect, bonds rallied sharply right at 8:30am ET. But the rally was short-lived and it's not a huge surprise. That's not a hindsight assessment either. It was actually our first analytical reaction. Reason being: the unemployment rate carries more weight than NFP these days, and it was only up to 4.4% from 4.3% last month. Beyond that, we can consider the payroll count was distorted by health care strikes (and noted by BLS at the top of the report). With health care doing so much heavy lifting, the impact on NFP can't be overstated. Finally, away from the data, we have the ongoing surge in oil prices which kicked into even higher gear today. At this point, inflation implications can't be ignored.
Additional weakness overnight amid ongoing oil surge. MBS down an eighth and 10yr up almost 3bps at 4.164
post payrolls, 10yr yields down 1.5bps at 4.121 and MBS up 2 ticks (.06).
Big reversal into weaker territory. MBS down 6 ticks (.19) and 10yr up 4bps at 4.176
Nice recovery with MBS down only 1 tick (.03) and 10yr down 0.3bps at 4.133
Best levels of the day. MBS up 2 ticks (.06) and 10yr down 2.3bps at 4.113
Slightly Weaker Ahead of Jobs Report
| Time | Event | Period | Actual | Forecast | Prior |
|---|---|---|---|---|---|
| Friday, Mar 06 | |||||
| 8:30AM | Feb Participation Rate | Feb | 62% | 62.5% | |
| 8:30AM | Feb Average earnings mm (%) | Feb | 0.4% | 0.3% | 0.4% |
| 8:30AM | Jan Retail Sales (%) | Jan | -0.2% | -0.3% | 0% |
| 8:30AM | Jan Retail Sales Control Group MoM | Jan | 0.3% | 0.2% | -0.1% |
| 8:30AM | Feb Non Farm Payrolls (k) | Feb | -92K | 59K | 130K |
| 8:30AM | Feb Unemployment rate mm (%) | Feb | 4.4% | 4.3% | 4.3% |
| 10:00AM | Dec Business Inventories (% ) | Dec | 0.1% | 0.1% | 0.1% |
| 10:15AM | Fed Daly Speech | ||||
| 10:15AM | Fed Paulson Speech | ||||
| 1:20PM | Fed Collins Speech | ||||
| 1:30PM | Fed Hammack Speech | ||||
| 3:00PM | Jan Consumer credit (bl) | Jan | $12B | $24.05B | |
| Monday, Mar 09 | |||||
| 11:00AM | Feb Consumer Inflation Expectations | Feb | 3.1% | ||
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