As we said in yesterday's recap, Wednesday was "refreshingly straightforward," with the overnight data suggesting logically stronger opening levels, Retail Sales sparking a quick sell-off, and the exceptionally strong 10yr Treasury auction reigning us back in.  When all the chips were counted, MBS ended up 1 tick in the green.  While Treasuries edged just slightly weaker overall, 10's are very close to the center of a sort of "post-NFP decision making" range. 

In other words, last Friday's Employment data served as one of the several upward jolts to Treasury yields that have combined to  form longer-term trends toward higher rates for several months.  The most recent "biggies" have been the late January ECB LTRO repayment data, the late February Italian election results, and then last week's Thursday/Friday ECB/Jobless Claims/NFP combo. 

This most recent swath of badness for Treasuries and MBS hasn't so much extended the previous trend as it has served to prevent a clean break from that trend.  In light of the positive data, we can forgive intraday yields for edging very slightly higher and accept the fact that rates now seem to be deciding whether or not to break north past the prominent 2.075 technical ceiling or venture back below 2.0.

If it's any consolation to those of us hoping for a move lower, it does in fact seem like that's what rates would do if left to their own devices.  In other words, there's been a consistently stronger show of support between 2.0 and 2.075 than we've seen anywhere else on the way up since late July or mid December (depending on your long-term vs intermediate-term uptrend preferences).  That said, stronger-than-expected data or more soothing-than-expected European events continue to pose risks.

There's not much by way of European data overnight, with the exception of Eurozone Employment (which isn't quite the same potential barn-burner as the US Employment Situation).  Domestically, Jobless Claims data is the headliner in the morning and the last Treasury Auction of the week--30yr Bonds--anchors the afternoon at 1pm.