At this point, it's getting more and more tempting to just give up the typical pre-NFP hullabaloo.  I mean really, how many more "all eyes on NFP" headlines do we need in a lifetime?

All eyes are always on NFP, even when they don't need to be.  Arguably, those eyes could have taken NFP days off for nearly a year now.  For one thing, payroll data has simply been solid and consistent.  Then there's the matter of mattering... NFP hasn't--not since a at least April 2014 when I asked you to take the leap of faith with me (HERE) and consider that bond markets were more willing to take cues from European QE prospects than NFP. 

Since then we've seen bond markets go against the implied NFP reaction almost half the time!  That's unheard of!

But why all this talk about NFP if it's only Thursday?  2 reasons.  First, there's not much happening today.  Second, we'd normally start talking about the "pre-NFP lead-off" potential on the Wednesday and Thursday of NFP week.  Ahhh... those were the days.

All we can really do is watch and react.  The considerations surround this month's events in Europe are too tricky to try to get ahead of (too tricky for me anyway, and I'd be skeptical if anyone says they know for sure).  Why do I say too tricky? 

1. The ECB will do "something."  Because of how stupid and broken the tangled mess of a relationship is between monetary policy and Eurozone politics, we have absolutely no idea what "something" will look like.  It's uncanny really.  This is the largest economy in the world, and it's the wild west of the central banking system.  The interplay between the ECB and Eurozone governments makes the Fed and Congress look like paragons of transparent economic virtue.

2. We've been led to believe that the ECB will ultimately twist Germany's arm into allowing sovereign debt purchases, but by the time that actually happens, who knows what kind of weird conditions will be attached?

3. Then there's the issue of Germany's constitutional court ruling on the already implemented OMT program.  Weird right?  That would be like the Fed spending QE money and the Supreme Court later deciding QE was unconstitutional.  Actually, it would be more like a circuit court ruling because Germany isn't the only country in the Eurozone--at least not officially.  Anyway, the point here is that ECB QE could change depending on the German court decision.

4. Then there's the situation in Greece.  The ECB announcement is on the 22nd and the Greek election is the 25th.  That's messy because ECB actions could influence the election (because a central theme is the Greek bailout package).  So if the ECB were to announce sovereign bond buying that included Greece, maybe they might not be as keen to exit the Eurozone.  I'm sure there's much more intelligent analysis to be made there, but the point there is that it's "messy."  Not only that, but ze Germans won't be happy if it seems that monetary policy is affecting sovereign politics--another hurdle for the sort of QE Mario Draghi would like.

5. Finally there's the matter of ECB QE's effect on bond markets.  Certainly Italy, Spain, Greece, et. al. will love it.  But what about Germany?  In the past, German Bunds benefited from QE prospects, but I think that's changed over the course of Q4.  During that time, we've seen money flood into Bunds driven more by panic and big-picture growth concerns.  If QE's goal would be to stabilize anf reflate the Eurozone economy then it wouldn't take long for Bunds to start bleeding out all that "global growth concern" money that's pushed them below 0.50.  This, of course, depends on how effective markets think the announced package will be.  If it's not up to snuff, Bunds could rally further. 

I'm going to stop writing now.  Hopefully you get the idea though.  We're kinda waiting to see how these big picture themes play out.  Here's a chart I'd prepared for today.  I was going to talk more about it, but will save the space and offer just a quick thought.  It's interesting to think about how focused the media has been on stocks and oil as epically important motivators for bond market gains.  It's even more interesting to see that shorter-term charts make it look like that's indeed the case!  But look at how bond markets (yellow and red) have marched to their own beat with or without the help in the longer term.  The most common explanation isn't always the right one.