It's been a choppy, back and forth, up and down trading session with no clear bias in motion.

Stocks are playing follow the leader with shifts in the value of the Euro currency. The S&P is currently coming off its strongest level of the day..right behind the Euro.

The exact opposite is occurring in the rates market. The 10 year Treasury note is just off its worst levels of the session, currently +0-02 at 101-23 yielding 3.296%. The trend channel continues to consolidate after the impulsive early day decline in rates.

Rate sheet influential MBS have performed admirably as TSY yields have backed up into support. The FN 4.5 is currently +0-02 at 102-03. The secondary market current coupon is less than 1bp higher today at 4.150%. Yield spreads have moved progressively tighter as the day has worn on and are now just off their tightest levels. The CC is now +85.2bps over the 10yr TSY note and 75.7bps over the 10yr interest rate swap.

Banks were MBS buyers at the price lows while fast money traders like hedge funds and money managers were seen adding position (basis trade) at the yield spread session wides. Meanwhile the slowdown in housing continues to be obvious via a lack of new loan supply in the TBA MBS market. Supply and technicals are supportive of day trading strategies...

The biggest reason I am concerned about potential reprices for the worse is a general lack of liquidity in the marketplace. If 10s fail to stabilize at 3.31% support and the FN 4.5 dips below 102-00...rate sheets will likely be recalled and republished for the worse.  I wouldn't expect this to happen unless the S&P breaks 1090 though..