• No NFP anxiety, markets are all about preparing for April
• Traders think stocks will suffer and bonds will pick up the slack
• Dovish Yellen helped grease the skids earlier in the week
• We may have already traded in a lot of the anticipated positivity
• 10s drop 5.8bps to 1.77.  Fannie 3.0s up 9 ticks to 102-21

There are at least 2 sorts of "lead-offs" that bond markets typically take: those at the end of a trading cycle (like month/quarter-end) and those before a big piece of economic data.  Today saw at least one of those and possibly both.

The notion of a lead-off refers to those traders who are able to get ahead of an expected move taking the opportunity to do so while other traders are forced to hold certain positions until the end of the month.  When most bond market participants close March's books at 3pm NY time and when the biggest single trades of the day come in within 5 minutes of 3pm, you know you're looking at this sort of lead-off.  

We came into the day with month-end and tradeflows being the dominant theme and this is unabashed confirmation  that traders are making big bets about what's going to happen in April.  They see dovish Yellen this week, an earnings season that is expected to disappoint, a blackout on corporate share buybacks, a potential near-term top in oil prices, and they are betting that bond markets emerge as the big winner.

The only catch is that these trades likely started happening right after Yellen, so we can't be sure how much of the true sentiment is already priced-in.  Either way, current levels aren't half bad, with 10yr yields ending the day at 1-month lows of 1.77 and Fannie 3.0s gaining more than a quarter point to close at 102-21.  

Oh, by the way, with respect to the NFP-related lead-off, I don't think anyone is giving that too much thought.  This move is all about the broader outlook for the coming month.  A super strong jobs or wages number might hurt temporarily, but stocks would have to surprise to the upside for bonds to take much damage in the coming week.  This is a case where the expected outcomes for both stocks and bonds may be a bit too obvious.