Let's be realistic about markets--bond markets anyway.  Nothing happened this week.  Of course "nothing" sounds a bit dramatic, so let's qualify that just a bit.  Earnings news contributed to fluctuations stocks, but not nearly as much as Europe, illiquidity, and pre-FOMC/NFP positioning.  For instance, the first two days of the week were docile by any standard, both for stocks and bonds.  Wednesday exploded by comparison (but only an explosion relative to the quiet that preceded it).  There seems to be some confusion as to what caused that movement, with the 10AM home sales data getting the credit for Wednesday morning's movement.  Feel free to lean on the following factoid as evidence that this is bogus: 10yr yields had already risen by 9bps by 9am!  2.5049 to 2.5937 to be exact, between 5pm on Tuesday and 9am Wednesday.  The home sales data wouldn't hit for another hour.  Even then, it was a non-event.  Markets moved more sharply following the 5yr auction and the release of the prepared remarks for the Obama speech.  Even that movement was a simple "cash out / cash in" that was washed out of both stocks and bonds in about an hour.  Shocking.

The lion's share of the day's movement ended up being a two-parter that started in Europe with a substantial sell-off in German Bunds.  It's not that we suddenly care about Europe too terribly much again, but any time Bunds sell off 15bps in one session, US Treasuries are going to feel it.  It's hard to say how much of the response in US markets wasn't simply an unwinding of complacency put in place by the low-volume drifting of the previous five sessions.  Stepping back and looking at the bigger picture, we see the only thing that really happened was an ongoing range-trade between 2.46 and 2.62.  Yields had drifted closer to the low end of that range, had occasion to move higher and simply moved back to the other side.  It didn't look certain that the 2.62 ground would hold, but after the week's auction supply needs were taken care of, yields settled back down under 2.6 and went on to an absolutely uneventful session today, locked in the narrowest range of the week, very close to the mid-point of the longer term range. 

Everything points to next week's big events.  Some build-up might be seen for FOMC, but the employment data is the bigger deal (barring a surprise from the Fed).  Whereas we can't be sure that the FOMC Announcement will be a meaningful event, we can be all but guaranteed that NFP will be.  Furthermore, ADP Wednesday morning continues to be a bit more relevant than it used to before the late 2012 methodology change.  A big beat or miss there could get snowball's rolling.  Ultimately, a break of either side of the range would suggest follow through to 2.75 or 2.36.