Overnight Treasury trading was positive, largely due to spillover from a much more forceful move in European bond markets.  Multiple asset classes are taking part in a global flight-to-safety.  That means things like stocks and oil are falling in price and things like bonds are rising in price.

By the time MBS began trading for the day, bond markets were already in significantly stronger territory.  Fannie 3.0s began over 3/8ths of a point higher and 10yr yields were already down under 2.0%.  As European trading wound down, another wave of buying hit US Treasuries.  That came not only from investors selling stocks and moving into bonds, but also from technical momentum.  In other words, as new low yields are hit, additional waves of buying are automatically prompted.  In turn, those bring yields even lower, prompting the next wave of buying. 

That snowball ran it's course by 12:10pm--just after the European bond market close.  bonds have bounced back slightly from there, but remain at the best levels since May 2013 on a closing basis.  ISM data at 10am was largely ignored.  Markets are focused on the broader concept of the global flight to safety surrounding Europe.

At this point we're watching 1.945 in 10yr yields.  A break above that would suggest a bigger correction into the afternoon.  In terms of MBS, 102-18 in Fannie 3.0s would be a roughly equivalent line in the sand.