Rates Surge Toward 8% After Jobs Data; Can "Spreads" Help?

Rates were already high coming into this week. As of last Friday, that meant an average 30yr fixed rate just under 7.5%. As of this Friday, we're closer to 8%. Certain lenders may be quoting lower rates, but that often involves the presence of discount points.  The Freddie Mac survey (orange line above) doesn't account for discount points.  It's also a weekly average and has not yet counted the rates seen on Thursday or Friday. Friday brought a sharp rise to the highest levels in 23 years.  The most obvious culprit was the big monthly jobs report which showed job creation (nonfarm payrolls) increasing far faster than economists predicted. It was one of only a handful of months in the past few years that came in higher than the 12 month trailing average. Perhaps just as importantly, this is a level of job growth (336k) that falls at the upper edge of the pre-pandemic range. Most economists thought we wouldn't be breaking back above 300k after averaging less than 200k for the past 3 months.  In a world where the Fed constantly reiterates "data dependence," this was a blow for rates.  10yr Treasury yields--the most ubiquitous long-term rate benchmark--left no doubts as to the bond market's response. It's easy enough to see the vertical line after the jobs data, but what's up with the fairly big recovery later in the day?  If bonds are freaked out about data, why would they erase a majority of the losses?