This week marks the first major intermission for the bond markets story in 2014.  The first act was intensely sideways, leading to phrases like "serious monotony problem." 

That observation was exactly one week ago today, in anticipation of a generally strong week of economic data and the prospects for NFP to finally be the thing that prompted a range break-out.  Here's that chart again:

2014-3-30 tsy techs

With that in mind, how did we fare with respect to range breakout attempts?  While yields shied away from breaking the upper limits of the range, what happened to the overall trend represented by the white line in the chart above? 

Coming in to Friday's NFP data, any further weakness would increasingly result in the long-term average (that's the white line again) 'lifting-off' from its sideways stint.  On Thursday night, it was looking as if a lift-off was imminent.  The only way things could have any chance to stay sideways would be if we rallied at least as much as we did, and no less.  Reason being: it took yields exactly back to the long term trend.

2014-4-6 Treasury Flatness

The best way to view this is as an opportunity as opposed to a guarantee.  Friday's rally gives bond markets the opportunity to continue to hold sideways, but shorter-term technicals (say, those back through February), continue to err on the side of 'slightly higher' in rate.

This week provides a good backdrop for honest reflection on this range because it has essentially no significant economic data--at least not the caliber of reports that command market movement unequivocally. 

There will, however, be a several speeches by FOMC members as well as the Minutes from the last meeting.  That's the one where the Fed did away with the 6.5% unemployment threshold verbiage and where member forecasts had a big impact on trading. 

On the adjacent days, the week's Treasury Auction cycle begins and ends with 3yr and 30yrs respectively.  10yr Notes are in the middle on Wednesday, one hour before the FOMC Minutes.  It's almost as if we're being left alone to consider the desuetude of bond-buying against the backdrop of Treasury supply (i.e. FOMC Minutes reinforce the steady abatement of QE demand while Treasury auctions remind us that supply isn't dropping as rapidly).

Monday is the lightest day of the week in terms of scheduled events, but the heaviest in terms of post-NFP follow-through (or correction, as the case may be).  Friday isn't completely able to be tuned out as it holds both Producer Prices and Consumer Sentiment.

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
96-24 : +0-00
FNMA 3.5
100-26 : +0-00
FNMA 4.0
104-06 : +0-00
2 YR
0.4147 : +-0.0003
10 YR
2.7207 : -0.0053
30 YR
3.5880 : +0.0020
Pricing as of 4/7/14 7:51AMEST

Tomorrow's Economic Calendar
Time Event Period Forecast Prior
Monday, Apr 07
15:00 Consumer credit (bl) Feb 14.09 13.70
Tuesday, Apr 08
13:00 3-Yr Note Auction (bl)* 30
Wednesday, Apr 09
7:00 Mortgage Market Index w/e 356.7
10:00 Wholesale inventories mm (%) Feb 0.5 0.7
13:00 10-yr Note Auction (bl)*
14:00 FOMC Minutes *
Thursday, Apr 10
8:30 Import prices mm (%)* Mar 0.2 0.9
8:30 Initial Jobless Claims (k)* w/e 320 326
13:00 30-Yr Bond Auction (bl)*
Friday, Apr 11
9:55 U.Mich sentiment * Apr 81.0 80.0