To be perfectly fair to financial markets, "things could get serious" at any moment really, it's just that the events that are more predisposed to bring on "seriousness" don't start hitting until tomorrow.  While it's possible that we could see the early phases of a pre-NFP lead-off (where trading levels start drifting away from neutral, central ranges in anticipation of a key event), Treasuries are currently so close to the center of their recent range that it would require an extraordinarily aggressive move to challenge that range.

If you've ever wondered why markets might favor one direction over the other when it comes to taking a "lead-off," it's as simple as a choice between the lesser of two evils.  There will always be a certain measure of enigma behind trading positions.  Various reports and surveys are released periodically that attempt to capture long vs short vs neutral, but even the biggest of the big traders will never be able to know in real time how everyone else is positioned. 

The "lead-off" (when it happens), can help shed light on that as it simply moves in the direction from which traders expect it would be easier to recover on the chance they're wrong.  Let's break that down a bit more. 

The direction of the lead-off is as simple as answering the following question:

If I'm a bond trader, what's worse for me right now: a big beat or a big miss? 

If a big beat is worse, it means I think I'll have a hard time selling if rates are moving higher, so I might start selling early.  If a big miss is worse, it means I think I might not be able to buy quickly enough at low enough prices, so I'm just going to start buying early.  This is a gross oversimplification, but in a nutshell, lead-offs are a hedge against pain for traders, and they offer rare glimpses into some of the positional considerations that aren't normally exposed.

Tuesday is almost certainly too early for such a lead-off on an NFP week that still has an FOMC Announcement, GDP, and ISM yet to come.  Today's only significant piece of data--Consumer Confidence at 10am--is a mere appetizer for the rest of the week's events, but still has plenty of market moving potential.  If there was one takeaway from yesterday's surprisingly big reaction to Pending Home Sales, it's that markets are willing to accept guidance from economic data this week, regardless of geopolitical headlines (though those remain a wild card in play as well!).

On a final note, it wouldn't be fair to MBS today to simply look at a chart of Treasuries considering the noticeable outperformance in the past several sessions.  Granted, this is all happening on a small scale, thus exaggerating the gap in the chart below, but it's still been noticeable.

The only problem with drawing conclusions from this kind of chart is that it can be taken either to mean that MBS are "too rich" versus Treasuries and thus aren't likely to continue outperforming or as the start of a trend of outperformance that continues for some measure of time.    In the current case, Treasuries are most likely distorted from flows relating to an active week for corporate bond issuance.  Also, the chart doesn't show how MBS underperformed earlier in the month, nor did I mention until just now that MBS tend to outperform on NFP weeks.  Fortunately, the discrepancy in the movement is small enough so as to not matter for any strategic purpose, but if you speak to folks who are curious why MBS lost less ground than Treasuries since late last week, now you have a few talking points.