Nonfarm payrolls aftermath: stocks rallied, yields lower - BBH

Analysts at Brown Brothers Harriman broke down the aftermath of the nonfarm payrolls sell-off for US yields and the stock market's rally.

Key Quotes:

"The US 10-year Treasury yields increased for nine consecutive sessions, over which time, it rose a little more than 30 bp to test the high water mark from the end of the year.  It had been recorded near 2.64% the day after the December Fed hike. After such a run, some sideways movement ought not to be surprising. Provided it holds above 2.50%, the pullback is not significant. The June note futures contract bottomed before the weekend at 122-20 and settled near its highs (above 123). Resistance is seen first around 123-10 and then ahead of 124-00.   

The S&P 500 extended its downside move in the first three days of last week and then recovered in the last two. Recall that the S&P 500 peaked on March 1 near 2400.  It approached but held above the support we identified near 2350. The two-day recovery at the end of last week saw it recoup nearly 50% of its slide. The 61.8% retracement is near 2383. Despite the firmer tone over the last two sessions, many investors are concerned on valuation grounds, and there is increased talk of the adage about three steps (Fed hikes) and a stumble."