Yesterday

- Bond markets were stronger overnight and maintained strength during domestic session

- 10yr Auction was well-received despite no "concession selling" beforehand

- MBS were choppy heading into 2pm, but held their ground

- Yellen's prepared remarks incited a big late-day rally

Today

- Economic data returns in the AM, though nothing earth-shattering

- Yellen delivers prepared remarks at Senate Confirmation Hearing

- Q&A after the speech has more market-moving potential

- Last Treasury auction of the week

Strategy

Yesterday was quite an interesting day for bond markets and one that goes a long way toward confirming hope that prices could hold their ground at recent lows despite a historical predisposition to trend in the direction suggested by NFP.  In other words, when NFP causes a big sell-off (as it did most recently), bonds tend to keep seeing selling pressure.

That suggested a cautious approach heading into yesterday, but the day itself offered a big enough rally that we may already consider support at post-NFP lows.  At this point, today's activity would have to be substantially negative to get us back there.  That doesn't mean it can't happen, but that it's not guaranteed (until yesterday, operating near the lows was more of a sure thing).

The surprise hit of the day was Yellen's prepared remarks for Today's Senate Confirmation Hearing.  The move was late enough in the day that much of it may have been snowball buying for defensive purposes as opposed to long term bets being made on lower rates.

The morning data, we could take or leave today, and we don't anticipate getting a true sense of what's going on until after Yellen's Q&A with senators is over, which should be late morning.  The 30yr Bond auction is at 1pm, and the 1pm-3pm time frame will be informative as well in trying to determine traders' short term goals.

Charts

Technical studies that--just yesterday--were bearish, are now much more promising.  Same story for MBS (not pictured).

Weekly Jobless Claims.  Past 5 weeks have been a fun little diversion, and we're now back to unencumbered data.  Maybe markets will care more?