There were two options for bond markets heading into today's session.  Recent weakness could have been extended, resulting in a "lead-off" taking yields up and out of the multi-month sideways range.  We were right on the edge of such a phenomenon yesterday, and they're not uncommon in the run up to NFP Fridays.  If it had happened today, it would have likely required a much stronger than expected ISM Non-Manufacturing report.

But we didn't get that.

ISM data came in just slightly weaker than expected.  This combined with a generally favorable reaction to the morning's ECB Announcement in core European bond markets (which always have at least some effect on US bond markets) has helped us realize the other potential scenario for today.  That's the one where we uneventfully hold within the multi-month range leading in to tomorrow's NFP, after being right on the edge yesterday.

That's the beginning and likely the ending of today's story.  2.80 to 2.82% in 10yr yields looks to be successfully defended as a ceiling, and nothing else is likely to be too interesting today.  On a positive note, successfully fending off a move higher means the only place left to go is in to positive territory.  MBS and Treasuries are doing just that, but tepidly.  Still, better than the alternative.

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
96-09 : +0-06
FNMA 3.5
100-11 : +0-05
FNMA 4.0
103-24 : +0-05
2 YR
0.4500 : -0.0080
10 YR
2.7789 : -0.0241
30 YR
3.6154 : -0.0336
Pricing as of 4/3/14 11:56AMEST

Morning Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
10:38AM  :  Bond Markets Improving Now, Helped by Data and Europe
10:09AM  :  First Move is Slightly Stronger after ISM Data
9:01AM  :  Bond Markets Unchanged Overnight, Hit Snooze Button After 1st Round of Data

Live Chat Featured Comments
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Victor Burek  :  "ECB leaves rate unchanged at .25"
Andy Pada, Jr.  :  "qe?"
Victor Burek  :  "nope"
Victor Burek  :  "but he is prepared to do whatever it takes"
Victor Burek  :  "kinda of amazing that our fed had to print trillions, and all he had to do was say he is prepared to do whatever it takes..."
Christopher Stevens  :  "Nice chart in the Day Ahead MG"
Hugh W. Page  :  "ditto on helpful"
Hugh W. Page  :  "Now all we need is miss on ISM, and a miss on NFP and we bounce higher....."
Matthew Graham  :  "RTRS- US JOBLESS CLAIMS ROSE TO 326,000 MARCH 29 WEEK (CONSENSUS 317,000) FROM 310,000 PRIOR WEEK (PREVIOUS 311,000)"
Matthew Graham  :  "RTRS- US FEB TRADE DEFICIT $42.30 BLN (CONSENSUS $38.5 BLN) VS JAN DEFICIT $39.28 BLN (PREV $39.10 BLN)"
Matthew Graham  :  "Not many buy/sell buttons gonna get hit on that data. A few snooze buttons though"
Christopher Stevens  :  "The thing that stands out on that chart MG is the last two yield run-ups in to NFP started at the bottom of the channel and this one has started mid channel. Seems the market is really anticipating stronger weather free NFP number."
Hugh W. Page  :  "Depends on the channel. If you take the range from beginning of Feb we're just about approaching the bottom of the range aren't we?"
Matthew Graham  :  "could just be a factor of preceding events. In Feb, we'd just had an impressive, corrective rally in the previous month. In March, Ukraine was heating up. Both events leading in to NFP weeks at recent low yields"
Christopher Stevens  :  "excellent points MG and ones that make me relax a little bit I guess. Thinking the 10YR has priced in a 200k number we would need to see 235k or better and some decent revisions to head closer to 2.85. imo of course"
John Paul Mulchay  :  "Anyone ever have issues with someone buying inv property who doesn't currently own a home?"
Ira Selwin  :  "Yes, but due to investor overlays. One I remember off hand required the borrower to qualify without the benefit of rental income."
Matthew Graham  :  "mitigating factor right there"
Matthew Graham  :  "Sorry BB. Somewhat included in the update, but to expound, the employment component of the ISM reports is important. While the weaker-than-expected headline suggests bond market strength, the employment component argues against it to some extent. "