MBS OVERVIEW
The much anticipated Non-Farm Payroll report arrived and it really
disappointed. As a result, MBS shot up but then something interesting happened.
They sold off and by the time your first live pricing is posted by your
investors or secondary marketing department, many of you will only see a very
small improvement in pricing. Watch today's video and read below for more.
ECONOMIC DATA
Non-Farm Payrolls: Where a big disappointment. The market was expecting 185K
new jobs but only got 113K. We have been stating that any reading below 160K
would be positive for MBS. But just as important as this reading was the prior
reading which if you recall was a big-time miss at only 74K. The market
expected significant revisions upward but it was only revised up by a mere 1K
to 75K. MBS shot up initially as a result.
Unemployment Rate: This dropped from 6.7% down to 6.6% but as we have discussed, bond traders largely ignore this reading. The only reason it has significance to traders is the 6.50% trigger that the Fed had originally pegged to their Fed Fund rate but they have recently stated that they would keep their rates low even after the Unemployment Rate breaks below 6.50%.
Unemployment Rate: This dropped from 6.7% down to 6.6% but as we have discussed, bond traders largely ignore this reading. The only reason it has significance to traders is the 6.50% trigger that the Fed had originally pegged to their Fed Fund rate but they have recently stated that they would keep their rates low even after the Unemployment Rate breaks below 6.50%.
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