While MBS have essentially maintained their QE3 sugar rush, Treasuries have taken the past two weeks to make an orderly move back to the same "safe" zone that characterized their previous return from a "dangerous" sell-off.  That safe zone is actually the fairly aggressive (historically) 1.6-1.7% range of 10yr yields that dominated most of June. 

Even though Treasuries and MBS experienced a big disconnect immediately following the QE3 announcement, and even if the relationship continues to be less than lock-step, 10yr yields have been and will continue to be one of the best metrics for the general state of affairs for Fixed-Income markets.  If 10's give cues that yields are rising, then it will eventually effect MBS, regardless of QE3.

Since hitting all-time lows in late July, 10yr yields have been trending higher.  The week ahead--especially the important data on Friday--will very likely determine whether or not yields continue to trend higher or are able to act more stubborn in and around this old June range.  While a lot of that could depend on European headlines, there's no domestic data more important to the outlook than Friday's Employment Situation Report.

Earlier in the week, manufacturing reports are in focus with Markit's purchasing managers' indexes at home and abroad.  The US version will be the first domestic data on Monday morning at 8:58am, followed by Construction Spending at 10am as well as another Purchasing Manager's Index, this time from the ISM (Institute for Supply Management).  There's scheduled Fed buying in the 8-10yr sector from 10:15-11:00am and two Fed speakers, Williams and Bernanke at 12:00 and 12:30pm respectively.