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The AM So Far... * ADP worse than expected at -254k * GDP Better than expected at -.7 vs. consensus of -1.2 # Bonds Initial reaction DOWN, 10 yr yields up, but have found resistance in both MBS and tsy's at better levels than yesterdays low range. # So far so good....

Something had to be done to pique your interest. Sure the S&P is up 5-6 points off the lows of the day, but the effect on bonds has been anything but a "flight." Here's the rundown: 2pm Markets At A Glance * MBS 4.5's up 4 ticks on the day at 101-02 after being as high as 101-05 around noon * Steady upward momentum since 10AM data changed to sideways consolidation in PM hours * 10yr tsy at 3.34 yield, 11 ticks of price improvement, after touching lowest yields of the day at 3.32 * S&P off lows less than an hour ago of 1041 and just got capped out right around the 1048 magic number discussed yesterday (38% retrace of recent cycle) * 117-24 to 117-25 getting the volume vote in futures so although they pushed as high as the 118-00 psych/tech ceiling, look for nominal retracement and unless volume picks up at the end of day, 117-24-25 indeed looks to be the range * Friday afternoon, typical data dearth + early exits + yom kippur next week * MASSIVE flattening over past few days now down to 235bps in 2's 10's. Does that even sound right after 245-255 seemed like new world order for so long. ...

As stocks continued a trend of selling that began shortly before the noon hour, bonds have rallied with MBS reaching up to familiar levels. The 4.5 is currently up 14 ticks to 100-28 which has and may continue to prompt reprices for the better. The 10yr tsy shot to its own version of familiar levels with yields prodding yesterday's lows at 3.39. Just before 2pm, stocks turned the corner. For the S&P that was a level of 1061. That index is back up to 1065, lower than the 1068 open, and well off the highs of the day at 1074, but more than enough of a correction to convince bonds to turn their own corner....