MBS RECAP: Bonds Shake Off Solid ADP Revision; Bigger Fish to Fry

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Posted To: MBS Commentary

At first glance, this morning's ADP Employment data may have been cause for bond market concern. It wasn't that the headline was much higher than expected. In fact, it was lower! But the revision to the previous month was quite a bit higher (300k vs 213k). Fortunately, this is ADP we're talking about, not to mention the fact that revisions aren't nearly as big of a deal as more timely headlines. For instance, if ADP came in THIS month at 300k vs 213k, you'd likely have seen traders quickly repositioning for increased risks of a bigger NFP number. With all of the above in mind, bonds were able to digest the ADP data without losing much ground. When stocks began sliding at the 9:30am NYSE open, bonds were happy to ride those coattails ( lower yields and modest MBS gains by…(read more)

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