Even though stocks and the Euro are trading lower, bond markets have been stubborn this morning in maintaining slightly weaker levels.  MBS are about 3 ticks down on the day at 102-08, and as you'll see in the following screen clip from MBS Live, continuing a strikingly linear trend channel lower.  Though not drawn, 10yr yields have been in a trend channel of their own this morning, and have just had a somewhat ugly bounce off a floor near 1.93 that was a ceiling yesterday (aka: "pivot point").

Despite the downtrend in MBS, outright levels that have Fannie 3.5's over the 102's are generally positive.  In the long run, we're maintaining higher levels in early December than most any session in November. Also, notice how November's trading is more densely packed and perhaps a bit more consistent.  December, by comparison has been choppy due only in small part to market events, and in large part to year end illiquidity.

Treasuries have been quite a bit choppier than in November as well.  Although it's not depicted in the chart below, December's range has higher highs and significantly lower lows than November's.  The horizontal white line in the chart below is a crossroads that 10's are considering today.  It's effectively the lower limit of the SIDEWAYS range in November.  Despite the low volume, if 10's bounce and stay under this 1.94-ish level, it would be a fairly bullish statement for US Treasuries and a tacit dismissal of the positive impact of the ECB's big lending operation over the past two days.