Today's calendar of economic events includes Jobless Claims, both of the manufacturing PMIs (Markit and ISM), and Construction Spending, making Thursday the most potent day of the week in terms of data.  While it didn't have much competition from the other days of the week in that regard, it will now face competition from Hercules. 

That's apparently the name of the snow storm bearing down on New York, threatening to cause road closures and give many a market participant ample justification for a 5-day weekend.  Past instances of such weather have a noticeably disruptive impact on trading conditions, and that should be doubly true during the holidays.  But what's the implication for rates/MBS?

Any time volume is low, there is always a chance for more volatility.  Just like identical scientific studies might have drastically different results with low sample sizes, so too can prices in bond markets when the sample size of trades and traders is low enough.

The other consideration continues to be NFP looming a week from tomorrow.  Based on December's FOMC Announcement and Bernanke's press conference, we can safely assume that tapering will continue at every meeting as long as economic data--chiefly, the labor metrics in the Employment Situation Report (aka "NFP" or nonfarm payrolls)--don't deteriorate markedly.  In other words, if job creation continues to average about 200k, we'll keep shedding $10 bln a month in bond buying. 

Those prospects are probably already fairly well baked in to 2013's year-end weakness, so unless we rally quite a bit over the next week, NFP would have to be quite an impressive 'beat' in order to scare rates higher at a much faster pace.  That limits the motivation for rates to go significantly higher and everything else limits the motivation to go significantly lower.  That doesn't mean we flat-line here, but a major rally or sell-off is unlikely in the short term. 

The only exception would be the tradeflow-based effects of the January ramp-up in participation.  In other words, when volume begins picking back up next week, there's always a possibility that the end-of-the-year trading in 2013 was either overly bearish or not bearish enough as far as the beginning of 2014 is concerned.  There could be a bit of hustle to get into the new 2014 stance. 

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