After an annoying morning of getting yanked around by every little European headline, bond markets have been calmer in the PM hours, ironically settling into levels very close to where they began trading today.  As we noted earlier today, this morning's economic data was a non-event, but tomorrow morning's could be.  Non-Farm Payrolls are forecast at +95k with the Unemployment Rate holding steady at 9.1%.  That's the only major release tomorrow and really one of the only domestic economic releases that has much of a chance of moving markets given the current tumult regarding EU headlines, their accuracy, and how to trade them. 

One of the most commonly used trading strategies in the wake of these headlines seems to be to grab firmly onto the hair of the lemming directly in front of you, try to keep up for a bit, and abruptly turn and go the other way whenever a EU headline crosses. Although this has caused a few lemmings to lose some back hair, it's prevented bigger problems as the whole herd hasn't managed to stay going in the same direction long enough to make it over any cliffs.

The key levels to watch going into tomorrow seem to be 2.07-ish as a mid-point for 10yr yields with 2.12-ish as support and anything lower as gravy, but perhaps 2.0 and 1.98 as the first notable points of resistance.

For MBS, we'd keep hoping for 101-26 to hold, although there's a bit further we could fall and STILL not have reentered the previous trend that governed most of October. On the upside, 102-00 is the first goal, then a noisy band of possible technical levels (102-03, 102-06, and 102-13) on the upside. That of course, assumes things are rallying after NFP (or on some EU headline), which, as is painfully obvious, is very much still up in the air.