“Holly $#@! Batman, what a number”!

Nonfarm Payrolls were down only 11K, the Unemployment Rate fell to 10.0%, and last month’s job losses posting revisions lower by 79K set the table for a “Katie bar the door” bond selloff this morning.  Initial reaction punished the 10 year note lower by over 1 point, taking the yield as high as 3.52% (right into good support I might add).  Mortgage backs followed suit with worsening interest rates and pricing.

Stocks loved the news, even though the dollar strengthened, up as much as 140 points on the big board at one time.  First of all, the numbers seem a little too good to be true.  Even though the data supports improvement across the metrics, everyone that wants a job still doesn’t have one.  I don’t believe this is a one hit wonder, just a sigh of steady improvement that we’ll call “less worse” with the potential to move up positive jobs growth from 10 to 12 months to 4 to 5 months.  Stocks are going to lead us around by the nose.  Key measures point to S & P futures taking out and closing above 1117 on the chart.  We tested that range (just a touch above) and have now pulled back 1101.  That puts the Dow currently in negative territory (off a baker’s dozen).  The key here is to see if stocks can rally given a strengthening dollar.  Looked good early, not so good now.

The equity sea saw have helped to stabilize the bond market, cutting losses on the 10 year note by 6 to 7/32’s.  Mortgage backs have come back from the abyss as well, improving by about 4/32’s depending on the coupon.  Might have a change to see a little price improvement before the day’s gone.  From the technical mail bag, the selling today will force confirmation of a very good sell signal (that’s why you should take advantage of any rallies “should” they occur).  Next major support has been hit and has held (3.52% yield on the note) which also coincides with the 40 day moving average.