There are no material "cause and effect" relationships between news/data and the slight bias toward weakness seen in MBS since the 10am hour. That weakness may look more pronounced than it actually is, due to the narrowness of the trading range. Fannie 3.0s are only 2-3 ticks from their highs of the day, currently at 104-12.

The 1pm 3yr Treasury Note Auction proved to be as uneventful as ever, leaving the focus on tomorrow's 10yr Notes at the same time. Consumer Credit at 3pm, along with comments from Fed's Lacker were similarly uninspiring. This has left us in a perpetual sideways drift after putting in the best levels of the day during the Fed' scheduled buying earlier this morning. The MBS version of the drift has simply been slightly weaker than the Treasury version, but we're not currently seeing any price-based risks of negative reprices.

It's not uncommon to see several sessions of consolidation following big swings. This is true for anything that can be charted, including the blood pressure of Loan Originators. It's also true for bond markets in the wake of last week's sell-off.

Friday may have seemed like a bigger move than it really was, due to the fact that we began the session at such ugly levels. And while it's true that we rallied around half a point from trough to peak, the day-over-day gains were only a few ticks.

Such has been the case for going on 3 sessions now (Friday, Monday, and Today, assuming we were to close right here). Both MBS and Treasuries are improved by what can only be viewed as a mere twist of the ratchet, and rather than view it as a prelude to anything in particular, it speaks more to a certain measure of comfort developing ABOVE the previously pivotal pivot at 1.86+ in 10yr yields. That's not to say that 10's won't ever fall below 1.86+ again, but simply that it could serve as some sort of central staging area for further exploration in either direction.

As for this morning, 10's are down 3 bps to 1.869 and Fannie 3.0s are up 5 ticks to 104-14 in trading that's relatively calm overall, but relatively more brisk than yesterday's slow session. Once again, bond markets are showing a disregard for stock market fluctuations that borders on wanton, at least as far as the positive "first 15 minutes" of the cash stock market open were concerned, but have hooked up a bit more as stocks have fallen from their opening push higher. Disconnected when it suggests bond market weakness, and connected when it suggests strength? We'll take it!

There wasn't much to write home about during the overnight session and 10's traded well within the confines suggested by yesterday's highs and lows. Bond markets weakened through the European session, but had already met with technical support before domestic accounts came online to help continue the minor move lower in yield. MBS opened flat to yesterday's closing levels and have packed on their 5 ticks of improvement steadily and uneventfully.

There's not much on the calendar today, but Fed Twist buying concludes at 11:00am, and as always, can cause some volatility. Then there's the 3yr Auction at 1pm, which we're slightly more interested in than we've previously been, but only to see if it garners any different reception than recently unimportant examples in light of last week's FOMC Minutes.

There are no material "cause and effect" relationships between news/data and the slight bias toward weakness seen in MBS since the 10am hour. That weakness may look more pronounced than it actually is, due to the narrowness of the trading range. Fannie 3.0s are only 2-3 ticks from their highs of the day, currently at 104-12.

The 1pm 3yr Treasury Note Auction proved to be as uneventful as ever, leaving the focus on tomorrow's 10yr Notes at the same time. Consumer Credit at 3pm, along with comments from Fed's Lacker were similarly uninspiring. This has left us in a perpetual sideways drift after putting in the best levels of the day during the Fed' scheduled buying earlier this morning. The MBS version of the drift has simply been slightly weaker than the Treasury version, but we're not currently seeing any price-based risks of negative reprices.

It's not uncommon to see several sessions of consolidation following big swings. This is true for anything that can be charted, including the blood pressure of Loan Originators. It's also true for bond markets in the wake of last week's sell-off.

Friday may have seemed like a bigger move than it really was, due to the fact that we began the session at such ugly levels. And while it's true that we rallied around half a point from trough to peak, the day-over-day gains were only a few ticks.

Such has been the case for going on 3 sessions now (Friday, Monday, and Today, assuming we were to close right here). Both MBS and Treasuries are improved by what can only be viewed as a mere twist of the ratchet, and rather than view it as a prelude to anything in particular, it speaks more to a certain measure of comfort developing ABOVE the previously pivotal pivot at 1.86+ in 10yr yields. That's not to say that 10's won't ever fall below 1.86+ again, but simply that it could serve as some sort of central staging area for further exploration in either direction.

As for this morning, 10's are down 3 bps to 1.869 and Fannie 3.0s are up 5 ticks to 104-14 in trading that's relatively calm overall, but relatively more brisk than yesterday's slow session. Once again, bond markets are showing a disregard for stock market fluctuations that borders on wanton, at least as far as the positive "first 15 minutes" of the cash stock market open were concerned, but have hooked up a bit more as stocks have fallen from their opening push higher. Disconnected when it suggests bond market weakness, and connected when it suggests strength? We'll take it!

There wasn't much to write home about during the overnight session and 10's traded well within the confines suggested by yesterday's highs and lows. Bond markets weakened through the European session, but had already met with technical support before domestic accounts came online to help continue the minor move lower in yield. MBS opened flat to yesterday's closing levels and have packed on their 5 ticks of improvement steadily and uneventfully.

There's not much on the calendar today, but Fed Twist buying concludes at 11:00am, and as always, can cause some volatility. Then there's the 3yr Auction at 1pm, which we're slightly more interested in than we've previously been, but only to see if it garners any different reception than recently unimportant examples in light of last week's FOMC Minutes.