MBS Day Ahead: The Five Different Ways The Jobs Report Could Play Out

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Posted To: MBS Commentary

Granted, by the time most of you read this, NFP will already be out, but I'm not as interested in the initial reaction as I am in how things play out over the rest of the day. It's not until the afternoon (and arguably, even until next week) that we'll be able to tell which sort of NFP reaction we're seeing. Here are the five eventualities: 1. NFP beats the forecast and bonds sell-off. This is one of the several 'straightforward' responses. It would let us know that markets are still putting stock in the employment data as an indicator of Fed policy action. This isn't my favorite because the Fed has all but said that it's inflation and global economic concerns keeping them from hiking. They're arguably well above the proverbial bar on labor markets when it…(read more)

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