Price levels in both MBS and tsy's are getting "testy" (in the sense that both are testing their most significant resistance levels of the month.  But as we've learned so many times in the recent past, we shouldn't get too excited about a sudden price change that ends up stopping precisely on such levels.  Just as we were dismissive about the 16 tick rally last Thursday due to its containment by the trend, so too are we not panicked as much as we otherwise would be upon encountering such a seemingly precipitous price drop.  What price drop?  This one:

For a better idea of how price movements are "failing" on their respective tests, a longer term chart is more useful...

The story is largely the same in tsy futures with the 116-26 support holding for now, although it is certainly under some serious pressure.  At the risk of saying the same stuff over and over and over again, other than simply shifting your bias towards locking when rates are operating near the highs of their recent range and shifting your bias towards floating when rates are at the lows of their recent range, there's not much you can do, unless you want to just go with the less thoughtful, less stressful, less risky, and less rewarding route of simply floating until reprice risk presents itself. 

On the otherwise light data week, ongoing tsy auctions stand to make the biggest waves.  To whatever extent you want to use the past as your guide, auctions themselves have proven more salubrious than the mere announcement of their amounts.  Moreover, they constitute one of the few mid-day data events that are actually significant for MBS, which means that any major shocks caused by the auctions can usually be avoided even if you're floating into tomorrow.  Considering the earlier lock alert today combined with the time passed since then (allowing the slow lenders to trickle their reprices for the worse in), tomorrow morning is now the first real uncertainty. 

MBS, Tsy, and LIBOR Quotes