Not much to report by way of material market movers...

As has been the case, the 3yr Auction had no impact...

earlier this morning, ECB's Draghi said "I think the term currency wars is way, way over done. We are not witnessing anything like that." That may be true, or it may be a matter of defining the word "war."

Clearly, global interconnectedness between currencies and markets is an increasingly hot topic for several years. This has been even more pronounced since the onset of the most recent phase of the EU Crisis beginning in late 2011. For instance, The long term low in the Euro in July coincided with the all-time low 10yr Treasury yield. Early February highs in TSY yields coincided with 14 month highs in the Euro.

The connectivity isn't omnipresent, and it's not rocket science considering the "risk-on / risk-off" trading patterns include the EU as well as the domestic economic and FOMC policy situations in the US. But central bankers--simply in addressing the term "currency war," give it more credence.

Euros surged in the early AM, and really set the tone for the day. Japanese officials commented on the Yen just before 9am creating a big swing lower in JPY/USD (stronger Yen) and there was a palpable response in bond markets (albeit on a much smaller scale).

Equities took over as the directional guidance giver of choice after the cash open, but the recent spat of Euro strength (on Draghi comments) helped stocks find their footing after 10:40am. Yields were following stocks lower until then and have gone sideways while the "risk-on" mini-bounce took place.

Scheduled Fed Treasury purchases just came through and this looks to be doing more good than harm at the moment with 10's down to 1.975. MBS, however, remain at their session lows with Fannie 3.0s down 3 ticks at 103-00, putting them more in line with the preexisting weakness in Treasuries that they'd, thus far been able to outperform. A caveat to this comment on Treasury stability: it's tenuous, and looks predisposed to keep a wary eye on equities and--though Draghi might be cranky about it--even currency gyrations.

The balance of overnight trading is now rendered mostly inconsequential next to the early domestic session tradeflows. Plenty happened overnight, but none of it was significant, and none of it moved 10yr yields outside a super narrow 1.95-1.97 range.

That changed abruptly around 8:20am as volume returned to bond markets with a vengeance (relative to yesterday). To put that in perspective, the first hour of trade this morning looks to be on pace with those seen on 2/7 and 2/8. The problem is that the flows are all sellers, or they were until about 8:52am.

Since then, a second wave of big trades has hit screens in Treasury futures and yields moved down a quick bp from the earlier highs of 1.982. Rather than stand out as a fundamental change in direction, these look like fast money accounts having a field day in the newly renovated playground afforded by the increased volume this morning. Long story short, this is a small-sized snowball in the big picture, but feels big relative to the past two sessions.

10's are currently hanging in at 1.977, with the most recent wave of volume looking more consolidative than anything. It stands a chance to be a supportive bounce considering equities futures bounced near yesterday's wee hour highs of 1516 in S&P futures and that this morning's 1.982 high in 10's is strikingly similar to yesterday's early high at 1.981, but flows have been too volatile to say that definitively.

Against all this drama in the Treasury complex, MBS have been the "little engine that could," with Fannie 3.0's currently down only 1 tick on the day at 103-02. Not only that, but MBS held their ground with a relatively high degree of composure compared to the whipsaw in broader markets. Fingers crossed for continued ground-holding here in Treasuries, which could allow further relative improvements for MBS. The stock lever has been fairly well-connected this AM, so the 9:30am opening bell is a focal point considering the lack of econ data.

Not much to report by way of material market movers...

As has been the case, the 3yr Auction had no impact...

earlier this morning, ECB's Draghi said "I think the term currency wars is way, way over done. We are not witnessing anything like that." That may be true, or it may be a matter of defining the word "war."

Clearly, global interconnectedness between currencies and markets is an increasingly hot topic for several years. This has been even more pronounced since the onset of the most recent phase of the EU Crisis beginning in late 2011. For instance, The long term low in the Euro in July coincided with the all-time low 10yr Treasury yield. Early February highs in TSY yields coincided with 14 month highs in the Euro.

The connectivity isn't omnipresent, and it's not rocket science considering the "risk-on / risk-off" trading patterns include the EU as well as the domestic economic and FOMC policy situations in the US. But central bankers--simply in addressing the term "currency war," give it more credence.

Euros surged in the early AM, and really set the tone for the day. Japanese officials commented on the Yen just before 9am creating a big swing lower in JPY/USD (stronger Yen) and there was a palpable response in bond markets (albeit on a much smaller scale).

Equities took over as the directional guidance giver of choice after the cash open, but the recent spat of Euro strength (on Draghi comments) helped stocks find their footing after 10:40am. Yields were following stocks lower until then and have gone sideways while the "risk-on" mini-bounce took place.

Scheduled Fed Treasury purchases just came through and this looks to be doing more good than harm at the moment with 10's down to 1.975. MBS, however, remain at their session lows with Fannie 3.0s down 3 ticks at 103-00, putting them more in line with the preexisting weakness in Treasuries that they'd, thus far been able to outperform. A caveat to this comment on Treasury stability: it's tenuous, and looks predisposed to keep a wary eye on equities and--though Draghi might be cranky about it--even currency gyrations.

The balance of overnight trading is now rendered mostly inconsequential next to the early domestic session tradeflows. Plenty happened overnight, but none of it was significant, and none of it moved 10yr yields outside a super narrow 1.95-1.97 range.

That changed abruptly around 8:20am as volume returned to bond markets with a vengeance (relative to yesterday). To put that in perspective, the first hour of trade this morning looks to be on pace with those seen on 2/7 and 2/8. The problem is that the flows are all sellers, or they were until about 8:52am.

Since then, a second wave of big trades has hit screens in Treasury futures and yields moved down a quick bp from the earlier highs of 1.982. Rather than stand out as a fundamental change in direction, these look like fast money accounts having a field day in the newly renovated playground afforded by the increased volume this morning. Long story short, this is a small-sized snowball in the big picture, but feels big relative to the past two sessions.

10's are currently hanging in at 1.977, with the most recent wave of volume looking more consolidative than anything. It stands a chance to be a supportive bounce considering equities futures bounced near yesterday's wee hour highs of 1516 in S&P futures and that this morning's 1.982 high in 10's is strikingly similar to yesterday's early high at 1.981, but flows have been too volatile to say that definitively.

Against all this drama in the Treasury complex, MBS have been the "little engine that could," with Fannie 3.0's currently down only 1 tick on the day at 103-02. Not only that, but MBS held their ground with a relatively high degree of composure compared to the whipsaw in broader markets. Fingers crossed for continued ground-holding here in Treasuries, which could allow further relative improvements for MBS. The stock lever has been fairly well-connected this AM, so the 9:30am opening bell is a focal point considering the lack of econ data.