MBS Day Ahead: How NFP Matters and How it Doesn’t

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Posted To: MBS Commentary

NFP, or "nonfarm payrolls" (the principle component of the big jobs report officially known as the "Employment Situation") are a bond market institution. No other data has consistently had as much of an impact on rates over the years. It is to bonds what the day after Thanksgiving is to shopping. It will always be associated with an abundance of transactions whether or not there are good deals to be had. In other words, traders have come to treat NFP day as a key ingredient in their trading strategies simply because everyone else is doing the same. NFP doesn't have to contain any major insights or suggestions about future market momentum in order to garner big reactions on the day it comes out. Some traders are simply waiting for the event to pass and then are prepared…(read more)

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