Two lenders repriced for the better on this morning's rally up to 102-16 and both have since repriced for the worse as MBS slid back down to 102-10, but that has largely been the trading level for the entire afternoon. Volume has been so low in both TSYs and MBS that it's almost a disservice to report prices at this point. The 3pm bond market close is in the rearview now and the initial disposition for the 3pm-5pm time frame seems to be benefiting bonds (albeit microscopically) instead of hurting them. Even as we write, Fannie 3.5's tick up to 102-11. Bottom line though: price action could be choppy, and if so, it's merely a factor of liquidity (or lack thereof). Reprices for the worse are not fundamentally justified in this environment, but some lenders might think so.

Last week, all the highest hours of volume in 10yr futures contracts were near the 130-140k range. The best we've managed so far today is the current hour at just over 80k, and that stands a good chance of being the largest of the day.

Stock markets and the Euro aren't doing anything too crazy, yet 10yr yields have fallen from nearly 1.98 yesterday to 1.92. Why the divergence? Probably a combination of post-auction-cycle relief and the current Fed POMO buying in 10's. That buying ends now and selling could pick up if the Fed didn't pick up some inventory that was otherwise hoping to be sold before year end. So don't fret over a little pop higher in 10yr yields here if we get them. Very little of consequence is occurring today.