First off, anything can happen on NFP days, so feel free to skip the rest of this and buckle up for the ride if you’re reading this before 8:30am ET. For those interested in some context for today’s possibilities, here you go.
It used to be a certainty that NFP would decide the bond market’s fate, not only in the near term, but frequently for the entire month that followed. Recently though, not only have markets had some counterintuitive reactions to NFP (like the last one where bond markets made it almost all the way back to ‘unchanged’ after the big 288k NFP day on July 3rd, and rallied the entire following week).
Today stands a good chance to return to the old school NFP logic where stronger results will be fuel on the recent fire while weaker results might tame the flames. Of course that depends on how big of a beat or a miss we see, but in general, NFP comes along right as 10yr yields are perched perfectly atop a technical fence at 2.57 (middle of the 3-month range). So it may not take much of a push to get them to fall in either direction. One one side of the fence, 2.47; the other side, 2.66.