• Bonds slightly weaker overnight; no major drama
• AM employment data (ADP and Jobless Claims) prompted more selling
• Stock prices and bond yields bounced lower together at 10:30am
• Bonds didn't make it back to positive territory but came close

By the end of the trading session, 10yr yields were less than 2bps higher and still in the "high 1.3's" (which has a nice ring to it).  Fannie 3.0s lost less than an eighth of a point and the only brisk move of the day was in a friendly direction as bonds quickly recovered from more gradual morning weakness.

When it comes to blaming something for that weakness, we don't really have to look any further than the past 8 days of amazing strength.  In fact, if we consider that yields hit new all-time lows on each of the past two sessions and that tomorrow's NFP report could easily inform the Fed rate hike outlook, it would have been fair to wonder why we hadn't seen a corrective bounce even sooner.

All that having been said, the morning's economic data provided good cover for bond markets to undergo that corrective bounce (i.e. stronger employment data makes a case for higher bond yields, even though yields probably wanted to go higher anyway).  

Almost as if by design, yields gravitated back toward the mid 1.38's by the end of the day--the previous all-time lows before this week.  Long story short, I see the past 2 days very much as a logical pause before the next act in the show.  As for the next move, it very well may be decided by NFP, provided we see a big enough departure from the 175k forecast.