MBS RECAP: ADP Armor Helps Bonds Fend Off Strong Jobs Report


Posted To: MBS Commentary

ADP provided a cruel gift on Wednesday. It isn't the most trusted advance indicator of the infinitely more important NFP data, but when it beats the forecast by more than 100k, markets can't help but adjust. And adjust they did! Wednesday was the epicenter of this week's bond market blast. All at once, traders got into position for NFP to surpass expectations. Traders seem to have gone about half-way toward pricing-in ADP's implications for today's NFP numbers. At 235k vs a median forecast of 190k, NFP wasn't high enough to justify the level of defense. ADP thus helped us endure an NFP report that otherwise would have pushed rates a bit higher . 10yr yields fell from roughly 2.61 to 2.574 after the data and simply consolidated from there. Mid-morning headlines out of…(read more)

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