MBS RECAP: Back and Forth After Jobs Report; Still Sideways

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Posted To: MBS Commentary

After the week's biggest dose of intraday volatility this morning, rates ended up almost perfectly unchanged. Charts suggest an uncommonly high amount of indecision with 3 out of the 5 trading days seeing overall ranges that were at least 4 times wider than the gap between opening and closing levels. Indecision was evident today as the jobs data prompted 2 separate reactions. The first read focused on the modest miss in the headline and the wage component. It only needed to motivate a few bond buyers to do its trick. Once yields fell by a few thousands of a percent, short-covering kicked in (traders who'd previously sold Treasuries short who were now compelled to buy them back in order to close the trade, thus protecting themselves from further potential gains). It's not that those…(read more)

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