After a ho-hum and mostly sideways overnight session, bonds are starting the day with a surprisingly swift reaction to the Jobless Claims data.  While this report may seem similar to the big monthly jobs report (after all, both generate an unemployment rate), they have never been in the same league when it comes to market movement potential.  To be sure, that is still the case, but the difference now is that markets are clearly expressing at least some interest in the weekly Claims data in terms of volume and volatility--something we've only seen a handful of times, ever.

We can further confirm the nature of the market's reaction by considering stocks as well.  In fact, both before and after the Claims data, stocks and bonds traded in their "Fed Friend or Foe" pattern.  This happens when data suggests a friendlier Fed and both sides of the market rally or when data suggests a more hawkish Fed and both sides of the market sell-off.  In other words, the equally noticeable rally in stocks at exactly the same time as bonds suggests the market is definitely trading Jobless Claims for its impact on Fed policy.

Here's the biggest takeaway: if this data was worth this much of a reaction, then the potential impact of tomorrow's jobs report is more massive than normal.