The jobs report came out mixed with payrolls falling 10k short of the 60k forecast and the unemployment rate ticking down to 4.4% vs a 4.5% forecast. The unemployment rate decline is mitigated somewhat by the decline in labor force participation. All in all, this is not a lopsided report with any chance of sparking a rapid move in bonds. That said, MBS are moving rapidly higher and it has nothing to do with data and everything to do with last night's announcement of the administration's plans to buy $200bln in MBS. Simply put, Treasuries are roughly unchanged while MBS are up half a point.
The chart below shows the dichotomy. Note that MBS prices have been inverted to show correlation with TSY yields (i.e. lower blue line = stronger MBS):
Not Quite The Rally You’d Expect, But a Rally Nonetheless
Not Quite The Rally You’d Expect, But a Rally Nonetheless
Today’s vitals might be a bit confusing at first glance. Payrolls came in at -23k versus forecasts of 80k. At most moments in history, that would be wor…