MBS Day Ahead: Time for The NFP Question


Posted To: MBS Commentary

Bond markets haven't been at all keen to react in a major way to economic data. Tax reform and other fiscal issues have been center stage for several months. Even before that, employment metrics had mostly faded from the spotlight, leaving inflation metrics (chiefly, the Consumer Price Index) in favor. Today brings the biggest employment metric of them all in the form of nonfarm payrolls for November. Economists expect a reading of 200k vs 261k previously. The unemployment rate is seen holding steady at 4.1%. These are the employment metrics that have faded from prominence, but there are still two reasons the report could give way to more active trading. The first is that NFP also contains a "wage" component in the form of "average hourly earnings." To whatever extent…(read more)

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