The Day Ahead: All Eyes On NFP Following Quiet Overnight Session

From MBS Live Moments Ago:

10yr yields moved just under 2bps higher from 3pm marks in an exceedingly quiet overnight session. There's some "risk-on" pressure on Treasuries after ECB President Mario Draghi said that a "comprehensive deepening of fiscal integration" was needed and that "far reaching treaty changes should not be disregarded." The fact that Angela Merkel said that the future of the Euro is "inseparable from European unity" (as opposed to turning red and rampaging about how a fiscal union and/or Eurobonds will never happen) is apparently being perceived by some as an early indication that she's warming up to the idea. 

MBS are about 4 ticks lower at 101-26, not a level that would have a desultory effect on rate sheets if it holds. But whether or not that turns out to be the case has almost everything to do with the impending Non-Farm Payrolls print at 830am. Out of 70 economists polled by Reuters, the consensus is 122k with a range of 70-160k. It feels like markets have been gearing up for something near the higher end of that range given current trading levels and the dearth of meaningful enough data to drive recent movements. As is always the case with NFP Fridays, we'll have to wait and see how things trade following the report to know for sure.

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