We've now made it through NFP week without having any "pre-NFP lead-off."  That's the pattern we occasionally see where bond markets will quickly snowball higher or lower, essentially showing their hand in terms of trading positions.  From there, NFP itself will either melt the snowball or make it much bigger.

Not only was their no "lead-off," but there really wasn't much of anything!  Modest range notwithstanding, rates have been dead flat.  Higher yields never lasted long before giving way to lower yields, which in turn saw quick bounces right back to the highs.  All of this took place in a narrow micro-range that's been flatter, longer than anything else recently.

Stepping back just a bit, we can see that yields previously found support around 2.20, dipped during China-inspired volatility, and returned to find more support (read: ceiling) around 2.20.  This sort of movement does a bit more to point out the supportive merits of said ceiling as opposed to any resistance offered by the lower side of the range.

On the other hand, just forget the technicals.  A lot of folks are saying a Fed rate hike is "priced in" to bond markets.  They're mostly right, but when 10yr yields are near the 2.13 range boundary, they would not bat an eyelash at a 10bp sell-off if NFP strongly supported a September rate hike.

What does "strongly supporting" a rate hike look like in terms of NFP?  From today's forecast of 220k, if payrolls came in over 240k with no major caveats in the internal data  (like Unemployment rates, avg hourly wages and the workweek) and no major revisions to the past 2 reports, a September Hike will be the consensus and bond markets will respond.  After all, the best takeaway from a trading range that's been as flat as this one has been recently is that of flexibility and a willingness to trade either outcome.