Most every indication we've had from economic data in recent months has been that it just doesn't matter that much to bond markets. Treasuries, especially, have been more content to take cues from European markets and EU QE prospects. MBS have been content to make smaller versions of those same movements.
Today was no exception as Treasuries sold off fairly aggressively following a half-cocked asset purchase announcement by the European Central Bank (it was basically "too little, too soon"). MBS played their part by selling off less aggressively, and both leveled off at recent inflection points. This is best seen as the mid 2.4 zone in 10yr yields which was about as low as Treasuries went in July and about as high as they went for most of August.
The implication is that tomorrow's NFP could either motivate a healthy bounce, or prompt a break back above the mid 2.4 inflection point. That brings us back to the notion of econ data being passed over in favor of European influences. It could happen yet again tomorrow, but if there's one report that deserves the chance to buck the trend, it is of course NFP.
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