Wednesday began in slightly better territory right from the outset as the European debt helped US Treasuries kick off the session with about half of Tuesday's losses recovered.  A weak private payrolls reading from ADP helped bonds extend gains, matching Tuesday's best levels.  In fact, this happened with a sort of uncanny perfection in both 10yr Treasuries and MBS.  But those levels turned out to be the limit for bond market strength through the rest of the day.

Far from being a jumping-off point for a major bounce, bonds ground mercilessly sideways with 10yr yields between 1.90-1.92 in the morning and 1.92-1.94 in the afternoon.  Things were sterner still for MBS, with a mere 4-tick range dominating the entire session.  Additionally, MBS did a much better job of exhibiting this "sideways vibe."

All this is not-at-all unexpected.  We imagine we could go back and quote recent commentary hypothesizing that the first four days of this week were probably destined to be fairly uneventful in the bigger picture with NFP Friday the only real mover.  But either you don't care to read it twice or can simply take our word for it.  The only real surprising thing so far this week is just how sideways things have been!

Can we make it "four for four" today!?  Today's data is sort of a shell-game, with the important points more likely to be where we wouldn't normally expect them.  The cast of characters includes Initial Jobless Claims at 8:30am along with Productivity and Unit Labor Costs.  Claims are normally interesting, but this week's don't speak to the survey week used for tomorrow's NFP report, so we'll pass on those.  Similarly, Productivity and Costs are in the same vein as GDP in that they're a quarterly statistic, subject to revisions.  Like GDP, today's numbers are preliminary Q1.  We'll pass on these as well...  Too strategic for our liking.

But at 10:00am, data gets more germane to tomorrow's topic in the employment component of ISM's Non-Manufacturing report.  Is it an earth-mover?  No...  We'd be very surprised to see a breakout of this week's range.  That said, if the thing is just awful, we'd be less surprised to see 10yr yields in the high 1.8's than we would be to see them closer to 2.0% if it turns out to be hugely bullish.  Hard to imagine anything too far outside those extremes, but maybe the first 3 days of the week were just a trap...