MBS Day Ahead: ECB Pushes Market Movement Voting Rights to Today's NFP

The ECB threaded the needle yesterday.  By some accounts, they did more or less than expected, but both camps agreed it was very close to expectations.  For instance, we'd discussed a near certainty of rate cuts, a near impossibility of actual QE and a good possibility of the previously used refinance vehicle (LTROs).  That's essentially what we got, so markets had little reason to adjust on the initial announcement itself.

Draghi's press conference was meatier as markets looked to it for cues as to how policy might evolve in the future.  There again, we saw a new kind of promise for future action in that Draghi specifically referenced the ABS purchase program rather than some vague, toothless promise about "standing ready to act as needed, blah blah blah."

The threading of the needle leaves more focus than we otherwise might have seen on today's NFP data.  Of course it's hard to imagine a situation where NFP simply isn't a consideration, but it was easier before yesterday morning. 

After last month's 288k print, the consensus is for 218k today.  More importantly, the consensus for Private Payrolls is 210k from 273k previously.  The boundaries for a stellar and horrible Private Payrolls number are roughly 60k in either direction of the consensus.  The lower boundary would be something only seen once since early 2012 (153k) and the upper boundary is a well-enough traveled resistance level that even hitting it would be a stellar implication for labor markets, unless we continued to see a dilution of earning power, where the same wages are divided among more jobs.