The only piece of scheduled economic data tomorrow will be Jobless Claims at 830am. Other than that, there are a few events on the calendar, but nothing of note. Even as far as the Jobless Claims report goes, it would have to deviate from expectations by a fairly large margin in order to deter markets from their likely course of range-trading into NFP. In other words, the current inertia is sideways unless acted on by sufficient force (like EU headlines for instance). That said, "sideways" in this case still leaves a lot of room for volatility, as could be seen in today's ultimately sideways MBS trading that still contained reprices for the better and worse. "The Week Ahead" has some good info to read both on tomorrow's claims and Friday's NFP, as well as some quotes from economists on the upcoming data. Here's the link:

(Reuters) - Investors pulled an estimated net $10 billion out of U.S. equity mutual funds in the week ended July 27, data from the Investment Company Institute showed on Wednesday. The outflow came during the height of the U.S. debt debate in Washington as well as data pointing to a weakening of the the economic recovery. ICI, a U.S. mutual fund trade organization said U.S. domiciled equity funds with a domestic focus posted outflows of $8.7 billion while foreign-focused funds had outflows of $1.33 billion. (Reporting by Daniel Bases)

Didn't take long to fall to 102-18. Although we're holding there for now, that's the target for potential reprices for the worse. Increasingly likely if prices move lower.

MBS fell another few ticks after holding perfectly sideways for about an hour. The losses were far from severe though, taking 4.0's from 102-23 to 102-20, still a quarter of a point better than yesterday. More importantly, movements in the bond market have been fairly subdued since hitting the low yields of the day around 10:40am. The stock lever is clearly engaged, and both stock prices and bond yields have been trending slightly higher in the last hour and in lower-than-previous volume. Even so, MBS could soon be looking at having to adjust for that. 102-18 would be a supportive target to watch IF things start moving in that direction. Otherwise, cruise control.

The pattern of MBS trading over the past half hour is exactly what you want to see if you're hoping for reprices for the better. It's been a very narrow range for the last 30 minutes, not changing more than 1 tick in either direction. It's just about a quarter of a point better than yesterday. It's lagging longer-dated Treasury gains by a normal amount. All of these things speak to stability, predictability, and relative strength. All good for rates. But we've seen a few reprices for the better already, and given current "best of the year" rate offerings, as well as the challenges facing secondary inherent in such rallies, there's not going to be a mad rush to reprice for the better from here. It can and will happen, but it will continue to be less than it could be until the overall rally has been around longer. 4.0's are currently up 6 ticks on the day at 102-24 and 10yr notes are now back up to 2.576. Those levels had been a bit more aggressive earlier, but markets have corrected gently from that previous pace.

It was a terrible process, but a good result. Now that Congress has reached a compromise to move toward restoring fiscal responsibility, what have we achieved and what challenges remain? The agreement creates room for the private sector to continue to grow, without the threat of default and the burden of higher interest rates...