Yesterday’s bond market volume was as low as it’s been since Monday, March 18th. Then, like now, bonds were on the approach to a big potential market mover, although the March 20th Fed announcement was almost guaranteed to be a big deal whereas today’s jobs report merely reserves the right to be.
Nonetheless, the narrow, sideways trading day brought us one step closer to the borderline between ranges seen in the chart below (2.55%). The overnight trading session finished the job, adding another few bps of weakness to almost perfectly erase all of the post-Fed gains and leave us right on the edge between THEN and NOW
This is the sort of behavior–a decisive return precisely to an obvious technical dividing line–we see when bonds are considering a big move. Naturally, NFP has the best chance of informing the direction of that big move. All we can do now is watch and wait.