For all intents and purposes, today is the first day of 2014.  While Monday's ISM Non-Manufacturing data is one of the more capable market movers, it had the misfortune of happening on the Monday back from the winter holidays.  That went a long way toward limiting the day's participation.

Yesterday would have been a better contender had there been any meaningful data.  It ended up trading about the same as Monday.

Today is a different story.  Not only does it allow more time for traders to get back in the office or back up to speed after the holidays but it also has potent data that's relevant to Friday's Payrolls report, the most relevant Treasury auction of the week, and FOMC Minutes.

First thing's first: FOMC Minutes probably aren't quite as serious as normal.  Tapering is already here and the message has been pretty consistent from that point on: $10bln per meeting assuming the overall economic picture keeps looking like a warm bowl of porridge.  Of course we can't ever rule out surprises when it comes to official Fed communications, but we shouldn't be surprised to see no surprises today.

The 10yr auction is simply a matter of housekeeping.  It's not the same sort of dynamic event as a major economic report.  While it can certainly move markets higher or lower, it does so on a fairly inelastic scale.  In other words, 95% of the time, it will result in a move of 5bps or less.

That leaves the ADP Employment numbers in the morning as the day's biggest market mover.  Because of their early timeslot (815am) it will consequently set the tone for the day if markets happen to respond in a big way.  

On a final technical note, here is the neckline of the "head and shoulders" formation in 10yr yields.  It will be interesting to see how it holds up against a big beat in ADP, if we see a big beat.  (The subtext here is that I don't think the technical levels are very significant at all if we're unlucky enough to see a big beat in ADP or Friday's NFP, but hopefully we don't find out). 

10yr Treasury Yields

MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
FNMA 3.0
95-14 : +0-00
FNMA 3.5
99-28 : +0-00
FNMA 4.0
103-15 : +0-00
2 YR
0.4009 : +0.0079
10 YR
2.9540 : +0.0170
30 YR
3.8867 : +0.0047
Pricing as of 1/8/14 7:00AMEST

Tomorrow's Economic Calendar
Time Event Period Forecast Prior
Wednesday, Jan 08
7:00 Mortgage Market Index w/e 351.1
8:15 ADP National Employment (k)* Dec 200 215
14:00 FOMC Minutes *