Tuesday proved to be an interesting post-Labor Day Tuesday as bond markets ended the day fairly close to Friday's levels.  Additionally, Treasuries and MBS traded "inside days," meaning that today's entire range of price/yield movement was contained inside the previous session's ranges.  Markets seemed determined to move sideways even when core European debt was weaker after Draghi's hints that the ECB has no treaty issues with buying debt up to 3yrs in maturity.

Today is the last day before things get serious on Thursday and Friday, or at least more serious.  We'd reserve the most serious descriptions for the following week of data that includes the FOMC Announcement and German court ruling on the constitutionality of ECB bond buying. The outcome of the German vote is seen as very important in determining how ECB intervention will continue to evolve.  For now apparently, no court decision is needed if the ECB buys 3yr maturities or shorter, but Thursday's ECB Announcement remains a significant event.  It not only sets the baseline for the following week, but also gives Draghi another chance to put the ECB's money where his mouth is--something that is still debatable with respect to his London speech wherein he vowed "believe me, it will be enough," in reference to doing "whatever is necessary to preserve the Euro."

But again, we have to wait until Thursday for the ECB Announcement.  Today's key release is a relatively stale Productivity and Costs report.  After all, it speaks to Q2 data and we're now in the final month of Q3.  We'd have to imagine that Q2 is fairly far from the center of the FOMC's field of vision when considering whether or not the recent crop of economic data is meeting their stated criteria of "sustainable and substantial growth."  To this end, Friday's NFP is likely the juiciest morsel the current week can offer.  That fact likely keeps the range relatively contained until then, barring a lop-sided reaction to Thursday's ECB events.

"Relatively contained" is a purposely ambiguous call, however, due to the ongoing possibility of "lead offs."  To be more precise, there's nothing on today's calendar that's going to convincingly mark the beginning of a new trend or a shift in the current trends, but that doesn't mean we're immune from movement.  Even then, we'd probably be more concerned about the rapid "keeping up with the Joneses" with respect to the phasing in of price hits for the recently announced additional 10bp Fannie/Freddie G-Fee increase.