Bond markets coasted into Friday afternoon in eerily stable fashion, and seemed set to head out for the weekend in significantly better territory than one week earlier.  But after failing to make more convincing gains and on the heels of a few big trades, snowball selling hit Treasuries hard, bringing MBS along for the unpleasant ride.  In about an hour, half of the week's gains were gone.  

Those precipitous losses will probably end up looking like one of two things by the end of this week: month-end/quarter gyrations (traders adjusting positions at the last minute) or a technical bounce off a perceived range boundary (traders perceiving that the "new range" is established at 2.14% in 10yr yields as opposed to say, 2.10).  The "technical bounce" option is much scarier while month-end considerations are a relative non-issue.

The reason that the "technical bounce" would be much scarier is this: it would suggest limited motivation for yields to return back under 2.10 or for MBS prices to rise above 103-10.  It would go a long way toward reinforcing that bond markets were seeing their first major incrementally weaker movement since moving sideways for months at their historically stronger levels.  Not to put too fine a point on it, and at the risk of over-dramatizing, it would be something like "the beginning of the end."  

We're not quite ready to buy into that level of drama just yet, but are sensitive to the possibility that markets might try to make it seem like a real threat.  There's a good bit of insulation between here and the more do-or-die levels (near 2.40% in the 10yr and 101-20's in Fannie 3.5 MBS), which is somewhat comforting, but this week does contain the data that could easily prompt markets to chew through it.

Tuesday's release of March 13th FOMC Minutes is the first focal point of the week.  Indeed when the March 13th Announcement hit (that was the first day of the recent sell-off), many market participants expressed more interest in Tuesday's minutes than the original Announcement.  

Then, of course, it's the usual lead up to The Employment Situation Report this Friday, beginning with the controversial ADP Private Payrolls report on Wednesday morning.  Less conventional is the fact that bond markets close at 12:00 noon on Friday; extra early compared to the normal 2pm early closes.  That will concentrate an awful lot of market reaction in a small window of time.  

For today, though, we get slightly less significant data, but still important.  Both The ISM Non-Manufacturing Purchasing Managers Index and The Construction Spending Reports hit at 10am Eastern.  The latter is seen being up 0.6 pct while the ISM Index is seen rising from 52.4 to 53.0.   One of three sets of scheduled Fed Twist buying will take place shortly thereafter (2020-2022 maturities) and conclude at 11am.