Lot's to talk about today starting with the Labor Department, who reported 97,000 new jobs for February.  This was inline with expectations, but Bonds traded lower on the news because of higher revisions to previous months, a drop in the rate of unemployment, and higher hourly earnings.

Even though this morning's Jobs number showed the smallest job gain since January of 2005, other portions of the report indicated there is still a tight labor market.  The Unemployment Rate fell to 4.5% from 4.6% and this was unexpected.  Also, Average Hourly Earnings increased by a greater than expected 0.4% (6 cents higher per hour) when the market was expecting only a 0.3% gain - that puts the average earnings per hour at $17.16.  Both the lower Unemployment Rate and higher than expected Hourly Earnings are signs of stronger wage-based inflation and this pressured Bonds lower while boosting stocks higher.  Also adding a little strength to the report were some higher revisions with 55,000 jobs added to the December and January reports.  

Federal Reserve officials will be active this afternoon and their comments may trigger some late session bond market reactions.  Fed Governor Susan Bies speaks at 12:30pm ET - she will likely be talking about the action in the Sub-Prime market; Fed Vice Chairman Donald Kohn speaks on inflation at 1:30pm ET.

The news keeps coming in on sub-prime Lenders, with the latest headlines focused on New Century (NYSE: NEW), as they said that they have stopped taking new applications.  The stock is getting taken out to the woodshed and is trading below $3.  Pretty rough for a stock that was around $52 back in May on 2006....and traded at $66 in December of 2004.

Other news of interest includes a comment by DR Horton CEO Tomnitz, who said that 2007 will "suck".  Wow, tell us how you really feel.

Technically, bonds are down about 12bp from yesterday's pricing and exactly where we closed last Friday.  But they now stand at an important crossroad.  Technical signals are conflicting, with strong support just underfoot - that's a positive for bonds.  But the reliable stochastic indicator has a negative crossover from an overbought state.  And the move lower this morning off resistance has formed a Bearish Evening Star pattern.  So what's the plan?  Float as long as the floor holds up - but should prices drop below the floor, lock quickly as selling momentum should follow.  And we will be watching it for you, so you will hear from us if locking action is needed.