Bonds Push Back Against Stronger Employment Data, But Tomorrow is a Different Fight

Abstract

Bonds got off to a weaker start today following 3 consecutive upbeat labor market reports. Yields managed to find a ceiling with the 10yr in the high 3.7s and ultimately made it back down to the low 3. 7/7s by the close (only a few bps higher on the day) MBS made a similar recovery. Some sources cited "new year" inflows for bond funds. Comments from Fed's Bullard helped a bit as well. Still, the most important observation for today was the more important observation was the willingness to react to labor data. Today's jobs report is an infinitely more tradeable event than today's 3 reports combined. MBS are off the lows by about an eighth of a point, but still down 3/9ths on the Day.