Bond markets were weaker in the morning hours today as corporate rate-lock selling and other tradeflow considerations left sellers in control heading into the domestic session.  The weakness had run its course before 9am and shorts (those betting on rates moving higher, ostensibly from earlier in the month or week) began mopping up positions. 

There was some extra activity owing to the expiration of Treasury options, and as levels improved slightly, more shorts began covering, making for a mild snowball rally that lasted throughout the session.  One thing's for sure: the economic data is really not having much of an impact compared to these more esoteric tradeflow considerations.

If that seems more confusing than simply watching for stronger/weaker data to push rates higher/lower respectively, it is.  But don't worry...  Market participants are fairly confused at the moment as well, as evidenced by the incessant hovering around the center of the recent bond market universe at 2.75%.  In terms of MBS, this equates to 104-05, where Fannie 4.0s have closed 3 out of the last 5 sessions (+ or - 1/32nd).

We really won't know where the inspiration will come from until AFTER we witness some more inspired trading.  Best guesses include more Fed-speak from Yellen next week as well as ADP/NFP the following week.