With some better than expected numbers released today the bonds gave back almost all of yesterdays gains in a large gap down open of -31 putting the FNMA (4.5 coupon) back down from its 2011 highs to 103.128. Here is the data driving this opening bell sell off.
Nonfarm Payrolls: Actual 244K, prior 216K (consensus was 185K) net gain realized +59K
While the numbers of jobs created in non farm payrolls is a better than expected number, the reality is we are still so far short of what is actually needed for job creation when you factor in the number needed to sustain growth and all the new arrivals into the labor markets we are still barely at 60% of the jobs needed. This is supported from the above data that shows better than expected jobs created with the unemployment number still rising.
I believe we will see some retracement to the opening bell sell off, once the substance of this over reactive move is digested and I expect today's trading range to be between 103.128 - 103.35 (FNMA 4.5).
If closing is 7-10 days - Lock this afternoon when some of the losses should be retraced
If closing is 14+ - Float cautiously as we should see next week bring us at or above the 103.5 level