As we've discussed in the past, bond rallies that are fueled by geopolitical risk require constant feeding if they're to survive and thrive.  In other words, the geopolitical situation has to continue deteriorating in order for the rate rally to continue. 

With that in mind, beginning as early as Friday afternoon, headlines suggested a deceleration in risk.  Taken together with events this morning and there's at least a lack of acceleration.  Bottom line, things may not be getting rapidly better around the globe, but they're not materially worse over the weekend. 

Markets are doing a good job of reflecting that nuanced situation.  Treasuries have lost some ground, but certainly haven't undergone any major, volatile reversal.  If anything, 2.44% in 10yr yields has been holding up well as a supportive ceiling so far today, even while stocks are rallying impressively. 

MBS are outperforming for the first time in August (Treasuries are the primary beneficiaries of geopolitical risk, so when the geopolitical rally fades, they tend to be the primary victim of the weakness as compared to MBS).  Fannie 3.5s are moderately improved while 10yr Treasuries are moderately weaker.