Looking For Support After Opening Weaker
The overnight session was shorter than normal for Treasuries as Japan is out on holiday. Futures were trading, but in name only (abysmal volume). 10yr yields rose roughly 2bps during the European session, dragged higher by weakness in core European debt after a few soothing headlines came out regarding Ukraine.
European debt caught a break just before US markets opened with lower inflation data dropping German Bund yields nearly 3bps. Treasuries didn't glean much benefit from that and were then greeted with domestic accounts who were more prone to selling at the CME open (Treasury futures pit trading).
10's were as high as 2.731 early this morning, but bounced back, and are currently at 2.719. MBS opened 3 ticks weaker, lost some ground and bounced with Treasuries. Fannie 4.0s are currently only 1 tick weaker on the day, once again outperforming Treasuries.
The only economic data out so far is Case-Shiller Home Prices (+0.0 non-adjusted, +0.8 vs 0.7 forecast, adjusted). It almost looks like markets reacted to this, but closer inspection reveals the move was underway for several minutes before the data. Next up is Consumer Confidence at 10am. While not the most important data of the week, it's definitely the biggest potential market mover on today's calendar.