MBS Day Ahead: NFP vs ISM

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Posted To: MBS Commentary

Bonds rallied big yesterday on a combination of factors. These included a rejection of the Trump administration's claimed timeline for the US/China trade deal with sources citing Chinese officials and a super weak reading on Chicago PMI. The gains added on to the previous day's positive reaction to the Fed. That left us to approach today with both optimism and trepidation. Optimism was warranted because bond momentum often shifts course after a Fed meeting and also after the end of the month. Both of those factors are in play today. Trepidation was warranted because the NFP forecast was surprisingly low (89k vs 136k previously). The only rationale for such a low print was the UAW strike. As we discussed yesterday, there was no great way to know how big a bite the UAW strike would take…(read more)

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