With 10yr notes currently at 3.433, yields have continued to trend toward slightly lower highs, prolonging a short-term intraday consolidation. On the low end, yields touched 3.423 after the previous low came in at 3.422. FNCL 4.5's are similarly within their extremes of the day, currently at 101-26 from lows of 101-25. There's a pivot point here marked by the highs at 10:30am yesterday. If prices move below there, the more jumpy lenders may be increasingly likely to reprice for the worse, but for now, the competing trends remain unresolved until further notice.

Higher lows and lower highs for both MBS and treasuries have continued into the 10am testimony by Bernanke before the House Financial Services Committee. 10's are currently at 3.43, and have formed a bit of a short-term triangle with today's yield movement. FNCL 4.5's are at 101-27. Remember, even if it's only on a small, intraday scale, that consolidating trends can mean a bit of stored energy can be released in whichever direction the triangle breaks. In other words, there are two converging trends. Whichever trend remains intact by the time they converge is more likely to remain intact going forward and/or the losing trend may now act as a pivot point.

FNCL 4.5's rose until reaching 101-30, but have since moderated to 101-28. Similarly, 10yr notes stopped improving just before reaching 3.42 and are back up to 3.438 now. But neither of these levels are weaker than the pre-ADP readings. With 45 minutes left until Bernanke, it's possible these higher lows and lower highs will simply continue in a consolidating range until the testimony and Q&A provides markets with more to digest.

Bonds were weaker this morning heading into the 815am release of the ADP employment data, but paradoxically have met with support despite the report printing better-than-expected results. 10 yr yields had approached 3.45 and FNCL 4.5's hit 101-25. Currently those figures have improved to 3.431 and 101-29 respectively.

Private-sector employment increased by 217,000 from January to February on a seasonally adjusted basis, according to the latest ADP National Employment Report released today. The estimated change of employment from December 2010 to January 2011 was revised up to 189,000 from the previously reported increase of 187,000. This month’s ADP National Employment Report suggests continued solid growth of nonfarm private employment early in 2011. The recent pattern of rising employment gains since the middle of last year was reinforced by today’s report, as the average gain from December through February (217,000) is well above the average gain over the prior six months (63,000). According to the ADP Report, employment in the service-providing sector rose by 202,000 in February, marking thirteen consecutive months of employment gains. Employment in the goods-producing sector rose 15,000, the fourth consecutive monthly gain. Manufacturing employment rose 20,000, the fifth consecutive monthly gain. Economists polled by Reuters were expecting payrolls to grow by 175,000 jobs in February.

Ahead of 8:15 data stock futures are slightly higher. S&Ps are +2.00 at 1303.00. Dow futures are +12 at 12,034. Bonds extended their late afternoon rally into the Tokyo session, the 10-year note yield traded as low as 3.379%, but failed to maintain that positive progress as traders were seen booking profits out the gate in the London session. The 10-year note is currently -10/32 at 101-18 yielding 3.438%. The 2s/10s curve is 2bps steeper at 276bps wide. The FNCL 4.5 MBS coupon is -4/32 at 101-26.

The number of planned job cuts announced by U.S.-based companies increased for the second consecutive month in February, rising to 50,702, the highest total since March 2010, according to the latest report on monthly job cuts release Wednesday by global outplacement consultancy Challenger, Gray & Christmas, Inc. The 50,702 job cuts announced last month was up 32 percent from January’s 38,519. It was 20 percent higher than the 42,090 planned layoffs announced in February 2010. This marks the first year-over-year increase in monthly job cuts since May 2009 when job cuts totaling 111,182 surpassed the 103,522 layoffs announced the same month a year earlier by seven percent. Despite the February surge, the pace of job cutting remains relatively subdued. The two-month job-cut total of 89,211 is 21 percent lower than the 113,572 job cuts announced in January and February 2010.