AQ couldn't have said it any better earlier this AM.  Indeed, when 5.7% growth hit the screens, our first instinct was to assume, "ok, well, that is not the REAL and representative measure of growth, so where's the discrepancy and what internals of the report support that?"  AQ covered those internals well in MBS OPEN, but the question remained, would the markets see it as bearishly as we do?  Would the headline of 5.7% drive the trade or were the markets going to take just as long a look at the internals?

Hats off to the market's logical response...  Not only has the range held up, but is currently in even better shape than most of yesterday..

Though it's a two-edge sword, the good outweighs the bad here.

THE GOOD: Bonds get to keep their seat at the big boy table despite a seemingly harsh rebuke from a "booming" economic growth indicator.  </sarcasm>.  This is very important because it means we've made it through an entire week of auctions and heavy econ calendar items.  GDP was really the last shoe to drop and that bonds have stood strong versus today's GDP after fighting back yesterday versus Wednesday's routing is good news and supportive news for the range lows established yesterday.

THE BAD: We find ourselves in the familiar position, lacking direction ahead of an important data event next week in the form of the NFP.  Volatility tends to pick up on such weeks as well which introduces the potential for a few rounds of rate sheet frustration next week.