MBS Day Ahead: NFP Week, But Monday Still Matters

Posted To: MBS Commentary

The weeks that contain the first Friday of any given month have a flavor all their own. Several of the month's most important pieces of economic data come out with Friday serving up the headliner in the form of Nonfarm Payrolls. There's no set formula for how bond markets trade in the run up to NFP Friday, but there tends to be greater potential for volatility, even if it's earlier in the week. Some of that extra, seemingly-NFP-related potential can have to do less with pre-NFP momentum and more to do with the reshuffling of a new month's trading positions after the previous month closes. We might look at the following chart, showing the first major divergence of the year in the "risk-off" trade and wonder if it had more to do with Japan's surprise rate cut (central...(read more)

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