Baseball has been very very good to us--doing a relatively perfect job of helping us characterize the "lead-off" that bond markets have been taking since their recent sideways grind gave way to the NFP approach.  Now that we've made it to the day itself with the lead-off intact (and quite well-behaved), where do we go from here?  Yesterday's chart laid out a few possibilities based on level yields ranging from 1.61 to 1.587 and then down to 1.55 on the aggressive side (followed by 1.46, but markets are pricing in enough of a downside surprise that such yields feel like too much of a stretch).

On the downside (or upside for yields), we have a whole slew of recent technical resting points for both MBS and Treasuries.  104-19, 104-10, and 104-00 are the first three defensive pivots that come to mind with 1.665, 1.68, 1.75, and 1.83 on the defensive side for Treasuries.  Whatever the case, the MBS Live Chat discussed yesterday, what level we think markets will perceive as positive or negative.  In other words, what would be cause for a rally or sell-off.  

Despite the 146k forecast for non-farm payrolls, it feels like something closer to 110k would be the inflection point as to post-NFP momentum.  It's worth remembering that the previous report came in at 88k, so anything that's higher than that (or whatever it's revised to) is technically an improvement.  None of the guessing here really matters though, as the result will be out well before rate sheets.  The point is that it's a pretty big piece of information we're getting today, and it will probably have to bode more ill than a mere "miss" in order to meaningfully extend the recent rally.  Just missing the consensus almost certainly wouldn't be enough (unless there were other factors like negative revisions or weaker complementary data later in the morning).