MBS MID-DAY: Bond Markets Pull Another Petal; Love’s Turn Today


– NFP +162k vs +184 f’cast
– June revised to 188k from 195k
– May revised to 176k from 195k
– Labor force participation rate: 63.4 vs 63.5 previously
– Private payrolls +161 vs +189 f’cast
– Avg workweek 34.4 vs 34.5 previously
– Unemployment rate: 7.4 pct vs 7.5 f’cast, 7.6 previously

Market Reaction: Initial positive pop in both MBS and Treasuries saw 10’s hit firm resistance at the 2.62 inflection point, they’ve since circled back to test a breakout in good volume and are currently at 2.613, which is still a bit too close to “confirm the breakout test.” Fannie 3.5s are up 27 ticks and 4.0s are up 23 ticks to 103-27–almost back to yesterday’s opening levels.

Total nonfarm payroll employment increased by 162,000 in July, and the unemployment rate edged
down to 7.4 percent, the U.S. Bureau of Labor Statistics reported today. Employment rose in
retail trade, food services and drinking places, financial activities, and wholesale trade.

The average workweek for all employees on private nonfarm payrolls decreased by 0.1 hour in July
to 34.4 hours. In manufacturing, the workweek decreased by 0.2 hour to 40.6 hours, and overtime
declined by 0.2 hour to 3.2 hours. The average workweek for production and nonsupervisory employees
on private nonfarm payrolls decreased by 0.1 hour to 33.6 hours.

In July, average hourly earnings for all employees on private nonfarm payrolls edged down by 2 cents
to $23.98, following a 10-cent increase in June. Over the year, average hourly earnings have risen
by 44 cents, or 1.9 percent. In July, average hourly earnings of private-sector production and
nonsupervisory employees were unchanged at $20.14.

The change in total nonfarm payroll employment for May was revised from +195,000 to +176,000, and
the change for June was revised from +195,000 to +188,000. With these revisions, employment gains
in May and June combined were 26,000 less than previously reported.

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