US bond markets have an increasingly clear plan heading into the first 2 weeks of September: trade a narrow, consolidating range, centered on well-traveled inflection points allowing for the flexibility to move in either direction depending on the tenor of the data and ultimately, the absence or presence of a Fed rate hike.  With the exception of the brief Chinese currency drama and the resulting market volatility, bonds have largely stuck to their plan.

The first 2 weeks of September are important for reasons reiterated last week by Fed Vice Chair Fischer.  He specifically reference this time frame as having an implications for a September rate hike.  In other words, if the data is strong enough, the Fed will likely hike.  Of those two weeks, the one with ADP, ISM Manufacturing, ISM Services, and NFP is clearly the most informative. 

With the first of those big reports coming out this morning at 10am, we'll soon find out just how interesting things might get ahead of NFP, which in turn will set the range for how interesting things might get ahead of the Fed Announcement 2 weeks from now.  The median forecast for ISM Manufacturing is 52.6 vs 52.7 last month. 

Between now and then, the range has been reinforced overnight by weak economic data in Japan and China.  Economic data was mixed in Europe, but an initial spike in German Bund yields was met with an even stronger push lower in global equities markets.  Bunds (Germany's 10yr and the European benchmark long term rate) fell back in line with opening levels and Treasuries have continued to outperform.