The first two days of the week were 'abnormal.' It's not that they were particularly strange in any alarming way, just that a few of the more common ingredients in the average bond market recipe were missing. Certainly, volume and participation were the most notable absences, not to mention outright movement (because there wasn't much movement). We also saw a noticeable breakdown in the recently strong correlation between stock prices and bond yields.
All that changed overnight and into this morning. The overnight session saw sensible connections between global economic data and bond market movement. Weaker data in the Asian session made for a slight boost and stronger data in the European session, a slight detraction. The net effect was positive for Treasuries overnight, with 10yr yields hitting the domestic session about 2bps lower.
MBS walked in the door about 2/32nds higher in price and gained another tick since then. The stock lever has been well connected based on futures trading, so the next major potential for movement is coming up just before and after the 6:30am cash open for stocks. After that, the first and only significant economic data of the day is out at 10am with New Home Sales.