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MBS Day Ahead: Guarding Against an Unfriendly Pre-NFP Lead-Off

Posted To: MBS Commentary

Bonds have been increasingly willing to react to economic data as we approach the fall months (the time frame in which the Fed's taper announcement becomes an actual threat). We continue to believe that the baseline for a taper announcement requires at least a month of the new school year to be in the books. The aggressive outlier (a September announcement) would require the next two jobs reports to be stellar (in addition to a calming of covid numbers). As such, they'll carry elevated importance. Without any significant data on the calendar, Thursday thus becomes more of an opening act for Friday's big show. That doesn't guarantee an uneventful session, however. We occasionally see a "lead-off" start to happen on the Thursdays before NFP Fridays, even if there's…(read more)

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