MBS Live Day Ahead: NFP or Syria. Or Neither

Cue the "all eyes" headlines that seem to pop up on NFP day, a la "All Eyes on NFP."  Well, this certainly used to be true.  It will probably be true again in the future, at a times when there's more uncertainty about shifts in the labor market outlook.  Right now, however, we're well aware that the labor market has been chugging along at a decent clip for much longer than normal (a fact that might mean more if it weren't partially due to the Great Recession creating excessive slack for labor markets to take up). 

The strong, stable performance means that NFP isn't be all end all market mover that it can be (and frequently has been in the past).  We know we're looking for other news and events to act as the source of inspiration for the next big dose of momentum.

With that in mind the news of a US air strike in Syria overnight jumps out as a compelling candidate--at least at first glance.  The news resulted in a quick move to the best levels since November for bond markets, but they've since moved back inside the prevailing post-election range.  I think if we were looking at something like US and Russia/China/N. Korea starting a nuclear war, that would be something for markets to freak out about.  Bombing the crap out of air fields in Syria--while surprising and serious--isn't quite up to the task of causing such a freak out.  

That leaves us largely in the same position as we were yesterday afternoon.  We know NFP can always have an impact on the day of its release (even when it isn't going to be the driving force of bigger-picture themes), and we know we are looking/waiting for the drivers of those bigger-picture themes to emerge.  Now, this morning, we know that the Syria news probably isn't that bigger-picture motivation, even though it might have seemed that way for a few hours in the overnight session.