A weak jobs report gave bonds an early lift Friday, and by the close it was gone. UMBS 6.0 settled at 98.06, down 26 cents, the 10-year Treasury rose to 5.273%, and the average 30-year fixed moved back up to 7.57% from 7.54%.

The headline number looked like good news for rates. September payrolls came in at 29,000 against a 90,000 forecast, and UMBS 6.0 jumped to 98.64 by 8:37 AM ET, up 32 cents. That was the high. By 11 AM mortgage bonds were back to unchanged, and after noon they slid into the red. From the morning peak to the settle is 58 cents. A closer read of the report explains the fade. Wages were the only other real miss, up 0.1% against 0.3% expected. Unemployment ticked up to 4.2%, but only because more people joined the labor force (participation rose to 61.8% from 61.6%), not because employers were cutting. That isn't a labor market cracking. A rebound in oil and calmer European bond markets also took away some of the support that helped Thursday. Several lenders repriced worse during the afternoon.

For borrowers, Thursday's 6-basis-point relief lasted one day. The average 30-year is back to 7.57%. The weak payroll number lowers the odds of an October rate hike, but the Fed debate is still hold versus hike, and cuts aren't part of it. Next week is light on data, with weekly jobless claims on Thursday, October 8. The next real test is September CPI on Wednesday, October 14.

— David Burson, NetRate Mortgage