Jobless Claims at 8:30am will be the key release of the morning, unless GDP manages to surprise.  Either way, 8:30am is the focal point and we'd expect MBS to make a decision (or confirm yesterday's decision) about the following chart shortly thereafter.  As it sits, the chart in question is supportive, although it would technically allow for significant losses today without becoming unsupportive.  Explanation follows in bullet points.  Take a look:

- 'previous uptrend,' QE3, and May 3rd Jobs notes are included just for context. 

- The important line is the 2nd red one from the bottom (with all the white arrows)

- That is the "speedline" based on QE3 highs and literally ALL NEW LOWS in 2013. 

- That means that a line from QE3 highs runs through every new low we've seen so far this year

- Based on that line, we can derive other speedlines which  have had a tendency to be more relevant than not in the case of this chart (meaning that for any given line, prices haven't been at all likely to move THROUGH the line, and when they do, they've been more likely to move to the next line rather than re-break the originally broken line.* 

- We'd have to sell-off to around 100-00 in Fannie 3.0s before revisiting the base speedline, so anything other than a horrible sell-off keeps the support intact.

Moving on to Treasuries...  More than any technical indicator overlaid on the volatile, negatively convex 3.0 MBS, Treasuries are our guidepost for the broader ebbs and flows of rates markets.  Forgetting the teal lines below for a moment, we're intently focused on the 2.11-2.04 band of yields centered on 2.07.  Again, this is a long term consideration, but it's the concrete floor from which yields attemped to leap in October 2011 and March 2012.

Short term worst case scenario: more leaping attempts with the intermediate term badness being clearly benchmarked by a break above 2.40.  That seems like too much to ask markets at the moment, and such craziness would probably require another NFP similar to the last one.  We're a whole lot closer to 2.07, however, and that could at least serve as a line in the sand, beyond which, some of the recent losses could be recovered on rate sheets ahead of next week's NFP Friday.  

* If a non-chart-based example helps, imagine playing a game every day where your final score improves over time until plateauing around 100.  You might score 99, 97, 97, 98, 100, but once you break 100, you don't score in the 90's again until you move up to, say, 150--spending some time with scores around there before moving back down to 100.  In that example, a 100 point game would be like one of the lines and a 150 point game would be like the next one.  There would also be lines at 200 and 50 for instance (let me know if that adds more confusion than clarity).