Bonds were slightly weaker heading into the jobs data, but still inside yesterday’s range. After the calm result, red is turning to green with 10yr yields quickly dropping.

MBS are up 13 bps early. Stocks flat

Nonfarm Payrolls = 209k vs 225k f’cast [339k prev]

Unemployment = 3.6 vs 3.6 f’cast [3.7 prev]

Hourly Earnings = +0.4% and 4.4% YoY

Wage inflation is the Fed’s biggest concern now, and it seems to have plateaued around this level for the past several months after declining in the second half of 2022. Pre-pandemic, average hourly earnings were increasing at around 3.5%, so we still have some ways to go in order to get back to a level the Fed is comfortable with.

Quits rate increased to 2.6%

Despite these gains, keep in mind that a 200k+ print is still a very strong number. Unemployment is still low. Last month’s NFP was revised higher (339k from 306k). Which, once processed ate up much of the gains.

Things could have gone better or worse today following the release of the mighty NFP (nonfarm payrolls, the headline data point from the big jobs report).  NFP came in at 209k vs 225k forecasts which may as well have been “as-expected.”  That was a victory in a sense, if we were comparing it to yesterday’s ADP number (497k!).  Bonds rallied initially for exactly that reason, but then pulled back because 200k+ is still very solid–more than enough to keep the Fed on track to hike 2 more times in 2023.

All in, MBS were only down 12 bps.  Stocks lost 12.64 points.