For the better part of the day MBS have been confined in a range between 101-25 and 101-28.  Except for a brief foray to 101-29, this trend goes all the way back to 8:30 AM.  We're closer to the bottom of that range at the moment with the 4.5 down 9 ticks at 101-26.  As the yield curve steepens, the lower coupon MBS tend to hurt the most and that's evident with 4.0's down 15 ticks to 99-08.

Speaking of that steepening yield curve, 10's have been  progressively less volatile, but much weaker, exhibiting the same range trading as MBS.  Yields were as low as 3.36 just before noon and as high as 3.39, but stopping more often at 3.38, which is also the current mark.

For now the decreasing volume has coincided with decreasing price volatility, but with the low volume, any buyers (or sellers) of size can have a greater than normal impact on prices.  If 101-25 in MBS or 3.39 in tsy's are broken, we'll let you know.  Stay tuned...