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Solid October Jobs Gains/Up Revisions, Tsys Rally Anyway

Not exactly the result one would expect after solid job gains and up-revisions to prior reads: Treasury futures marched higher all day after initially trading modestly weaker on Oct NFP: +531k job gains vs. +450k est, Sep up-revision to +312k and unemployment rate drop to 4.6% vs. 4.7% est.
  • Tsys drew some sporadic buying/short covering after initial surge in selling across the curve. Futures marched higher with 30YY tapping 1.8708% low -- last seen Sep 23. Yield curves bull flattened for a period before bull flattening as the session progressed, 5s30s tapped 80.566L before bouncing to 82.671 after the bell.
  • Fading the rally, sources report real$ acct selling in 10s, 20s and 30s late morning, rate receivers/payer unwinds in 2s-10s. Trading desks also partially tied rally to re-positioning in aftermath of Thu's FOMC (accelerated taper schedule) and Boe (hawkish hold) while gilts continued to outperform.
  • Equities made new all-time highs (ESZ1 4711.75) while oil surged (WTI +2.75 to 81.56), Bbg story reports: "Saudi Aramco Raises Oil Prices Sharply After OPEC+ Defies Biden" call to increase output.
  • Data look ahead: PPI and CPI on next week's shortened Veterans Day holiday (Nov 11), Treasury coupon supply (3s, 10s and 30s on reduced size) and Fed speakers coming off the sidelines.
  • After the bell, 2-Yr yield is down 2.6bps at 0.3988%, 5-Yr is down 6bps at 1.0507%, 10-Yr is down 7.7bps at 1.4496%, and 30-Yr is down 7.9bps at 1.8837%.

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