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Snowball Sell-Off Ahead of Jobs Report

The bond market isn’t necessarily expecting the jobs report to come in higher or lower than expected (after all, how can you expect something other than expectations?), but if it were to come in higher, that would be just the sort of terrible luck that seems to have befallen bonds this week.  In the midst of curve-driven repricing (markets shifting to focus on 10yr yield volatility instead of 2yr), bonds have been hit by higher Treasury borrowing needs, lower buyback plans, a ratings downgrade, and the largest foreign holder embarking on big selling campaigns to control its own yield curve (Bank of Japan). It was the latter that hit the hardest overnight and resulted in moderate follow-through during the domestic hours.  2yr notes escaped nearly unchanged whereas 10s spiked 10bps by 4pm.