In the day just passed, bonds successfully stormed the castle, assuming the castle refers to 10yr yields with a "1" in front.  At first inspiration came from follow-through trading of Wednesday's Fed events coupled with weak economic data at 10am.  The day's biggest development was the announcement of new tariffs on China just before 1:30pm.  This sent stocks into a tail-spin and sent bonds on a tear.

The day ahead is all about NFP (the Nonfarm Payrolls component of the jobs report that has come to refer to the entire jobs report for many market participants).  On average, this is the most important piece of economic data on any given month in terms of its ability to move bonds.  Today is no exception, but we should also keep in mind that the labor market is one of the two things that the Fed acknowledges as humming right along (the other is "the consumer").

What does that mean for today?  The simplest conclusion is that it affords us some insulation against a strong number.  In other words, if the Fed already accepts a strong jobs market, a strong number won't make a rate cut any less likely.  The catch is that this is so well understood that markets may have accounted for that "insulation" by buying bonds more aggressively yesterday and this morning.  Indeed, we saw yields as low as 1.831% overnight, although we're back up to 1.88% just ahead of the data.