Today went off without a hitch for bond markets.  A rally in European debt overnight (strong German bond auction) helped Treasuries and MBS start the domestic session in positive territory.  The massive reversal in yesterday's month-end "steepening" trades was also clearly evident.  In other words, bonds with longer maturities were in more favor today as the month-end trading positions that favored shorter maturities no longer needed to be defended.

As expected, the biggest mover of the day was the economic data.  Here again, an absence of month/quarter end trading considerations combine with the fact that today's reports provide relevant insight to Friday's jobs report meant that this morning's data stood a good chance to set the tone.  Indeed it did, and in a great way for rates as ADP was much weaker than expected.  Then at 10am, ISM Manufacturing fell to the weakest level since May 2013, further building a case for a general turn in the data.

Bonds rallied in both instances, but 10yr yields hit resistance at 1.852.  That's important and interesting because it's the same level that provided resistance last week.  It's also in the midst of a long term inflection point.  This raises the risk of weakness tomorrow, but clearly suggests a weak NFP would help break through the resistance. 

Lenders passed along the price gains on rate sheets, bringing most to their best levels since early February.