With the limited data this AM and an extremely important data event at 1pm, tradeflows and charts tell the story this AM, and it's a simple one.

 As we've seen so often, markets tend to trade along pre-existing ranges toward some sort of inflection point.  An oversimplified way to think about this (but a relevant one) would be that since a very important data item has the potential to move markets either way fairly quickly, traders don't want to be too far away from the rest of the pack, especially if the pack ends up continuing in the opposite direction after the data.

Charts reflect this search for neutrality.  MBS is trading very close to the levels that supported it yesterday, and is now ostensibly seeking support from 12/3's resistance.

Tsy's are decidedly in a range between 3.42 and 3.36 over the past two days with 3.40 being supportive so far today..

Stocks are still worthy of a chuckle as the continue to operate in a ridiculously narrow, symmetrical, and extended "flag pattern."  This isn't shown on the chart below, but the similarities to the last session are.

With that, we'll take a short recess and reconvene moments after the 1pm hour to hear the 10yr tsy auction read the verdict on the rates market.  It may be severe or it may be a hung jury that waits for tomorrow's auction to offer clearer guidance.  Stay closely tuned for alerts just after 1pm, but remember how much volatility follows even auctions that ultimately lead to positive results for MBS.

The 4.0 coupon is down 3 ticks at 99-07

The 4.5 coupon is down 4 ticks to 101-30

The 10Y tsy is down a tick at 3.392

2s v 10s remains quite steep but flatter than previous, now at 266.6 bps

stocks are basically unchanged.