Nonfarm Payrolls strengthened in January with massive upward revisions to December’s numbers; December’s data was revised up from 252K to 329K. Nonfarm Payrolls increased 257K vs. consensus of 228K to cap to largest three month gain since November 1997 averaging 336K. A +0.2% increase in the Labor Force Participation Rate led to a 0.1% climb in the Unemployment Rate to 5.7% vs. 5.6% prior (consensus 5.6%). Average hourly earnings increased +0.5% for the largest monthly gain since November 2008, a signal that wage growth is picking up as employers add new jobs. Today’s positive Jobs report helps confirm the Fed’s statement last month that the labor market continues to improve and adds to investor’s speculation that the Fed could raise rates later this year. Treasury yields hit the highest intraday levels in three weeks in response to the hotter than expected payroll data, selling off roughly -21 ticks to push yields to 1.894%. The curve has bear flattened with 2s10s down -0.5 bps and MBS continues yesterday’s outperformance, tightening 3.0-4.5 ticks in the production coupons.
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