Chinese markets were closed overnight for New Year. This slowed trade somewhat. Coupled with a lack of significant economic data this morning, it also put more emphasis on the events from the previous trading day. In this case, that previous day was Friday. That’s when a series of economic reports (including the mighty jobs report as well as another heavy hitter, ISM Manufacturing) came out much stronger than expected.
Stronger data isn’t always a death knell for bonds, but it stung a bit more than normal this time around due to the Fed Announcement from 3 days prior. The Fed had just finished making a case for an easier monetary stance due to global growth concerns. And while that was probably a cop out intended to cover for a nagging fear of a big stock market sell-off (they can deny it all they want, but they’re only human), they nonetheless reiterated their stance that upcoming economic data would be doubly important.
I’m guessing the Fed was like 99% of the rest of the market watchers out there in that they never expected nonfarm payrolls to crush its forecast by as much as it did. Even then, bond traders were willing to be patient until the 10am data. But once that data also came in universally stronger, it was game over for recent rate lows. This morning’s trade was simply an extension of Friday morning’s momentum, and now we find ourselves back in line with levels from just before Wednesday’s Fed Announcement.