As MBS fell in line with their lows of the day, we have seen one lender actually reprice for the worse. We still wouldn't read anything into it as an indication of impending weakness. Still, for highly sensitive short term decisions, it does speak to a slightly elevated risk that another lender could follow suit. But to reiterate, MBS volume is dead, markets are closed, and while there's technically justification for a reprice here, we don't think it's particularly good justification, assuming it was based on market movement.

10yr notes are finishing out the week at 3.075, right on the "snowball" level mentioned yesterday when it provided the first and highest-volume bounce of the day. Bottom line, the market has had 2 days of exceptionally high volume to decide on these levels and both days congregate in similar territory. Is it a bullish indication of things to come or a bearish warning of a pull-back? That's a fair question and one that stands a good chance of being answered, at least in part, by next week's NFP. Indeed, from a technical perspective on the longest term charts, next week is eligible to act as either a bounce back into weaker territory or a breakout into lower yields. If 10's break lower, it would be one of only 3 times that particular trend would have been broken since before 2005 (the others were the initial 2008 crash and the 2010 repeat crash). Between now and next Friday, there are plenty of market-movers, including Consumer Confidence, ISM Manufacturing, Chicago PMI, ADP Employment, Case Shiller, and Construction Spending just to name a few. With the shortened week, the abundance of econ data, and the looming NFP, we could see all manner of pitchy price movements in MBS, but the key vote for the longer term momentum centers on Friday.

FNCL 4.5's are down a few ticks to 103-25 and 10yr notes are slightly higher than earlier at 3.07 now. Perhaps if it wasn't the last hour of a shortened day before a lengthened weekend, and perhaps if volume wasn't at the lowest levels of the day and perhaps if technical levels were also being tested, this might be of a slight concern. Even then, it would require all of the above ingredients in order to cause any level of alarm.

Time to start breathing again... This wild week is effectively over. Huge volume has come and gone over the past two days and although the calendar may call today a 2pm close, that's not early enough for lunch and there's not much of a point to coming back and turning the screens back on for one measly hour. The dying volume leaves busier hours of this morning and yesterday as the writing on the wall: this week is ending with TSYs and MBS casting a firm vote to move to their best levels of the year. FNCL 4.5's are 1 tick off yesterday's close at 103-28. Look at the 2 day chart... Yesterday's mid-day ledge became today's lows, yesterday's highs were today's highs, and prices have moved in a narrow, consolidating pattern all day. Similar occurrence in 10yr notes. Yields backed up to technical levels, found support, and consolidated into the lowest marks of the year, currently 3.059. Reprices for the better aren't extremely likely, and we haven't seen any, but it's an outside possibility.