As we discussed late last week, the ability for bond markets to hold gains related to geopolitical risk would be predicated on those risks intensifying. Arguably, that's the case in both Ukraine and Gaza over the weekend as hostilities and casualties increased.
That said, there weren't any surprises to catch markets off guard in the same way that some of last week's did. As such, the bond market gains are modest.
Japanese markets were closed for a national holiday, making for a slow start to the overnight session. The European session saw sideways movement in core government debt. German Bunds (10yr) traded modestly to either side of all time low yields.
Treasuries traded on either side of Friday's close, but have edged into slightly more positive territory as the domestic session gets underway. MBS opened in line with Friday's close, but have added 2 ticks so far, bringing Fannie 3.5s to 105-21.
There are no significant events on the calendar, leaving the focus geopolitics and perhaps domestic stock trading.