It's always a struggle to think of something to say on the morning of the jobs report before the jobs report actually comes out.  It will be whatever it will be and will move markets however it moves markets.  Big beats will almost always crush us and big misses will almost always help us.  It's only the situations where the end of the day sees bonds swing back around in a counterintuitive way where we can learn something (like this "aha moment" re: ECB QE way back in April 2014).

Even so, I will try to come up with something here, although it will be the same thing I said yesterday and could quickly be disproved by reality.  Them's the breaks when NFP is involved, so take it for what it's worth. 

Economic data has erred on the side of weakness recently--especially the employment anecdotes.  As such, traders have moved to price in some NFP weakness, because it's mathematically more likely based on the other data.  Of course markets price this in faster and better than you can get ahead of it, so this isn't some inside line on a market imbalance.  Rather it's a heads up that bonds are already performing a bit better due to the expectations for weakness.

Now that last part IS important and useful!  If we know that some of the recent strength is based on the assumption that NFP misses, then an NFP beat becomes a much bigger risk.  If we simultaneous observe that bond markets just ran into long-term resistance from an outright inflection point as well as a trendline, then it adds to the apprehension about a beat.  Here's yesterday's chart that shows the technical bounce:

2015-4-2 Close

As the chart also shows, we're at the bottom of that long term trend--yet another risk factor today.  We've also rallied decisively from the other side of the trend--yet another risk factor.

Bottom line, there are several reasons to be anxious about NFP defying the anecdotes and pulling a rabbit out of the hat.  But there is also reason to believe that we see moderation.  Of course we have March's employment anecdotes with an obviously negative bias, but we also have a multi-month divergence between private payrolls and ADP.  Now, I'll be the first to point out that ADP isn't a great month-to-month indicator, but it's the most correlated data to NFP's private payrolls component over time.  It's suggesting that NFP might be due for a correction from its recently bullish trend.

2015-4-2 adp

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
102-09 : +0-00
FNMA 3.5
105-02 : +0-00
FNMA 4.0
106-29 : +0-00
2 YR
0.5436 : +0.0046
10 YR
1.9126 : +0.0536
30 YR
2.5350 : +0.0690
Pricing as of 4/3/15 7:30AMEST

Tomorrow's Economic Calendar
Time Event Period Forecast Prior
Friday, Apr 03
8:30 Non-farm payrolls (k)* Mar 245 295
8:30 Private Payrolls (k)* Mar 237 288
8:30 Average workweek hrs (hr)* Mar 34.6 34.6
8:30 Manufacturing payrolls (k)* Mar 10 8
8:30 Unemployment rate mm (%)* Mar 5.5 5.5
8:30 Average earnings mm (%) Mar 0.2 0.1
12:00 Good Friday *