We're now far enough into the final pre-NFP day of the week to safely observe yet another instance of range-bound zigging and zagging.  In other words, bond markets aren't really doing much apart from playing pinball between range boundaries.  If we wanted to chart that, it would look something like this:

2015-9-3 zigzag

When markets are engaged in this sort of noncommittal nonsense, it really gets in the way of meaningful analysis.  All we can really do is say that there's a narrow range, and there's a good enough chance that it's in anticipation of tomorrow's NFP data.  Of course, that could flop as well, and then we'd really be in a pickle, considering the monotony-breaking event would then become the Fed Announcement on Sep 17. 

As for today's particulars, the morning rally was all Draghi (European Central Bank president).  He left the door open for more QE beyond the Sept 2016 end date--a fairly toothless gesture, considering no one expects that the date is etched in stone for better or worse anyway.  More interesting was his change in tone regarding growth and deflation.  On a quantitative note, the ECB did raise the limit on the percentage of any single issuance they could buy (from 25 to 33). 

US bond markets didn't respond nearly as well to the European motivation, though they did bounce around yesterday's best levels while Europe continued to outperform.  Rising oil and stock prices put pressure back on domestic bonds at the NYSE open, making for the quick move back to weaker levels.  After that 'zig,' we've already 'zagged' back toward better levels.  I could make up several reasons that would sound convincing, but I think the zigging and zagging is its own reason for existence at this point. 


MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
MBS
FNMA 3.0
100-24 : +0-05
FNMA 3.5
103-29 : +0-05
FNMA 4.0
106-14 : +0-04
Treasuries
2 YR
0.6963 : -0.0157
10 YR
2.1600 : -0.0280
30 YR
2.9370 : -0.0169
Pricing as of 9/3/15 1:08PMEST

Morning Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
10:27AM  :  ALERT ISSUED: Weakness With Renewed Corporate Issuance; Could Pose Reprice Risk
10:18AM  :  Draghi Comments Help; Non-Manufacturing a Non-Event So Far

Live Chat Featured Comments
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "RTRS - ISM NON-MANUFACTURING BUSINESS ACTIVITY INDEX 63.9 IN AUG (CONSENSUS 61.0) VS 64.9 IN JULY"
Matthew Graham  :  "RTRS - ISM REPORT ON U.S. NON-MANUFACTURING SECTOR SHOWS PMI 59.0 IN AUGUST (CONSENSUS 58.1) VS 60.3 IN JULY"
Matthew Graham  :  "RTRS - DRAGHI SAYS QE MAY RUN BEYOND SEPT 2016 IF NECESSARY"
Victor Burek  :  "more QE"
Matthew Graham  :  "RTRS- DRAGHI SAYS RENEWED DOWNSIDE RISKS HAVE EMERGED"
Matthew Graham  :  "RTRS- DRAGHI SAYS ISSUE SHARE LIMIT WILL BE INCREASED FROM 25 PCT TO 33 PCT IN QE"
Matthew Graham  :  "RTRS- US JULY TRADE BALANCE -41.86 BLN DLRS (CONSENSUS -42.4 BLN) VS JUNE BALANCE -45.21 BLN DLRS (PREV -43.84 BLN)"
Matthew Graham  :  "RTRS- US JOBLESS CLAIMS ROSE TO 282,000 AUG 29 WEEK (CONSENSUS 275,000) FROM 270,000 PRIOR WEEK (PREVIOUS 271,000)"