The week began on Tuesday, for all intents and purposes.  July's "month-end" trading generally took place by last Friday and Monday was left as a mere afterthought.  Yields fell nicely on Tuesday as "new month" trades unwound July's month-end weakness, perhaps getting some help from ultra-weak GM sales numbers (I know... this may be the first time we've brought "auto sales" into the rate analysis arena).

Rates kept trickling lower from there as traders priced-in a weaker-than-expected jobs report.  After all, a preponderance of anecdotal evidence suggested the median forecast was a bit too high this time around.  But that's the great/funny/frustrating thing about NFP: it always reserves the right to play by its own rules.  Today was one of those days, with payrolls coming in at 209k vs 183k forecast.

Bond traders had clear marching orders.  For some, it was a good opportunity to become sellers again.  Others held out and ultimately acquiesced to selling pressure a few hours later.  Between the two waves of selling, yields moved almost perfectly from one key technical level (2.22%) to the other (2.28%).  In fact yields broke above 2.28% briefly but ended the day in a perfect sideways drift at 2.264.

Fannie 3.5s managed to lose only an eighth of a point by the close, after having been down a quarter point earlier in the day.  Lenders maintained their recent habit of "minimal changes" to rate sheets although a few did offer token improvements with the afternoon gains.

In the bigger picture, we ended up right back in line with the levels seen just after Tuesday morning's "new month" trades.  Given the calendar of events ahead, we might wonder if we'll be waiting until Jackson Hole at the end of the month before seeing the next major wave of momentum in bonds.