This is the hardened body of a caterpillar, possibly a banded tussock. The tiny Braconid wasps in the Genus Aleiodes, lay eggs in the living caterpillar. The eggs soon hatch, the larvae eventually make holes in the caterpillar's body which allows bodily fluids to leak out 'gluing' the body to a twig or branch. The body hardens, becomes 'mummified' (hence the name of the wasps that cause this), and the wasp larvae pupate inside. When ready to emerge they chew their way out. You can see one or two holes here if you look closely.

(More info can be found in Charley Eiseman's book on tracks and signs of insects)