Mortgages were mostly flat to treasuries after the NFP report, a decent sign of stability as they had leaked wider into the sell-off during the week. Supply was robust with originators selling $2.5B without the forced convexity selling that exacerbated the weakness during the week. Hedges have moved solidly up in coupon to 4.0s and 4.5s with originators posting 4.375% to 4.5% as their primary rates.
The jobs numbers Friday morning did not disappoint as the US added 235,000 new jobs in the month of February, more than consensus estimates of 200,000. An unusually warm February, the warmest on record in over 60 years, helped construction workers gain jobs that typically start later in the year. Other releases of note on Friday saw the unemployment rate fall to 4.7% while participation up ticked to 63%, a good sign that entrants to the work force are able to find a position. The report all but guarantees the Federal Reserve will hike interest rates by 0.25% on March 15th and begs the question how many more hikes could be on the docket for 2017.
Stocks gained 0.3% with the S&P ending at 2,372.90, paring some of the slide seen earlier in the week. Bond prices increased with the yield on the 10-yr note falling to 2.58%, below the 2.60% that Bill Gross says triggers a bear market in fixed income.