Happy employment Friday. A massive rally in mortgages is underway after this morning’s jobs report failed to deliver what many expected to be further positive data after yesterday’s ADP report. Treasuries and mortgages started the day in the red as real money investors and convexity hedgers we’re still in sell mode from yesterday. That quickly changed after Nonfarm Payrolls proved to only increase by 96k – many were expecting ~145k after yesterday’s positive news. Private Payrolls were also disappointing as they only grew by 103k vs. 142k expected. Manufacturing jobs got whacked as well, losing 15k jobs vs. an expected increase of 10k. Right now mortgage prices are floating around somewhere in the mesosphere as Fannie 3s are once again are trading north of 104-00 – a full point higher than before the employment report. This print certainly puts QE3 back on the table for next week’s Fed meeting; I’d put odds at 50% right now.