To be clear, bond markets are indeed in their weakest recent territory AFTER this morning's economic data, but NOT necessarily BECAUSE of it.  While Treasuries and MBS had visible reactions to the ADP data and even to Factory Orders, neither of the two reports were any sort of shining example of market-moving prowess.

Instead, this move has been in the works since late March when bonds prematurely exhausted a month/quarter-end rally.  The bounce back was largely a matter of momentum shifting into the new month (which is why weaker Chicago PMI on Monday and weaker ISM Manufacturing on Tuesday did little to deter further weakness.

"In the works" in this case doesn't necessarily mean we were destined to hit 2.80% in 10yr yields today--simply that we were already in the process of bouncing off the lower end of the rate range.  The extent to which we're destined to move higher is tentatively 'limited' by the upper end of range boundary, which we get from March 7th's 2.82% highs.  Again, 'limited' doesn't mean rates won't go higher, just that it's a significant move if they do.  The days leading up to NFP reports are prime candidates to see these sorts of "lead-offs" outside the range--usually into weaker territory. 

As of right now, we're not even officially leading-off outside the recent range--simply pushing right up to the edge of it.  That's still plenty unpleasant for rate sheets though.  Fannie 4.0s are down a quarter point.

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
96-03 : -0-10
FNMA 3.5
100-07 : -0-08
FNMA 4.0
103-21 : -0-08
2 YR
0.4579 : +0.0239
10 YR
2.8027 : +0.0437
30 YR
3.6464 : +0.0424
Pricing as of 4/2/14 12:29PMEST

Morning Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
10:31AM  :  ALERT ISSUED: Getting into Riskier Territory Now as MBS Extend Losses
10:10AM  :  10yr Yields Crest 2.80, MBS at Fresh Lows After Factory Orders Data
9:30AM  :  ALERT ISSUED: MBS hit New Lows as pre-NFP Lead-off Threatens to Begin
8:27AM  :  Bond Markets Initially Weaker After 'Near-Consensus' ADP Numbers

Live Chat Featured Comments
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Oliver Orlicki  :  "191"
Victor Burek  :  "go figure, they just so happen to revise the prior month to about the same as nfp reported"
Scott Valins  :  "tepid response from ADP so far"
Corey Leonard  :  "Yay jobs were only slightly below estimates, let push stocks to all time highs"
Matthew Graham  :  "RTRS- U.S. FEB FACTORY ORDERS +1.6 PCT (CONSENSUS +1.2 PCT) VS JAN -1.0 PCT (PREV -0.7 PCT)"
Tim McNerney  :  "aaannndd...there goes 2.80"
Michael Gillani  :  "Either way, it looks like we'll be around 2.85+ before NFP and with a meet or beat, we'll be at 3%, maybe even higher on the 10 yr the way I see it. This market wants to continue to play the risk on game as long as traders can continue to make record commissions on new highs. They're not going to let that snowball slow down unless they have to."
Jeff Anderson  :  "GM, all. Well today's chart is looking.....ugly. Not digging 2.80+. Bounce?"
Hugh W. Page  :  "Still heading to the bottom of the range apparently. Let's hope for a bounce soon!"
Ted Rood  :  "we're down 50 bps from the 27th....."
Victor Burek  :  "but pricing is down about 75 to 100 bps"
Christopher Stevens  :  "The 10YR testing the high side of current 2.60-2.80 range going in to NFP should not be a surprise especially after that ADP revision. I would not be too concerned unless of course we break through 2.82 with volume."
Victor Burek  :  "I don't think anyone pays attention to the revision on adp"
Victor Burek  :  "everyone knew it was going to be revised higher because nfp was higher"