The Day Ahead: Data Calendar Stages Last Ditch Effort To Rile Markets Ahead Of NFP

After more than a week of utter containment of trading levels in bond markets, Thursday marks the last chance for events, data, and headlines to cause a noticeable reaction in Treasuries and MBS.  Even without the eerie, sideways grind in benchmark Treasuries, MBS would still stand a good chance to have their recently adopted "what, me worry?" attitude thanks to QE3-inspired levity.  Truly, MBS can do no wrong when there's a guaranteed $80bln / month buyer in the room.

But whether or not the MBS buying continues unabated, or becomes tragically whittled down to a more modest $40-$45 billion-ish, is something that we'll probably start thinking about as soon as we see a few NFP prints over 200k.  Reason being, QE3 is open-ended, and once a certain employment benchmark is reached, the Fed will throttle down.  They've been clear that this won't occur prematurely, and we believe them.  MBS buying isn't likely to subside on one or two decent employment reports.  It will take the formation of a new trend in growth--one that we don't see on the near term radar (and neither does the Fed if their "mid 2015" low-rate outlook is any indication).

Regardless of that relative insulation for MBS, bond markets in general have essentially run out ideas after stepping off the post QE-3 ledge.  Treasury yields spiked, returned to earth, and have been stone silent since September 25th, in the same 5bp trading range as far as 10yr yields are concerned.  To put that in perspective, the movement of the past SIX TRADING DAYS has been less than half that of the 30 MINUTES following September's NFP report. 

Only one more day to go to see whether or not we make that SEVEN days...  But at least the contenders get more serious today.  The ECB is back again with another rate announcement and press conference (yeah it feels "Too Soon™" to us as well), as the Bank of England.  We will actually hear from our own central bank, but only in the form of the "Minutes" from the last Fed meeting.  These can still move markets, but we imagine there is little left to learn after they've already pulled out the bazooka.  The potential market-mover line up is rounded out by some moderately important economic reports including Weekly Jobless Claims, Factory Orders and Challenger Job Cuts for September.