Nothing has materially changed from the Mid-Day recap, so for the nuts and bolts of today's rally, that would be the best place to get caught up:

MBS MID-DAY: Everyone Loves Bonds! Except Greek Bonds!

You'll notice that both titles contain some form of "love," and that's really the best way to characterize the market's infatuation with and lust for strong sovereign debt.  Guaranteed tradeflows into German Bunds (and the rest of the Eurozone) are a big help, but more than that, the absence of inflation and ongoing global growth concerns are increasingly unmanageable problems.  And bonds are one of the only ways to deal with such problems.

Eurozone inflation came in at -0.6% this morning.  German Retail Sales missed estimates (.2 vs .4 forecast).  US GDP came in lower than expected, and wage growth fell significantly.  While domestic labor metrics look good, there's not much by way of economic traction that normally stokes inflation.  With 60% of the population not making any more money than they were in 2007, inflation is going to continue to be a tall order. 

Then there are the currency considerations.  If the dollar is appreciating, there is additional implied yield in bond markets simply be realizing the currency appreciation.  If I'm a European bank and $100 dollars of US debt costs me 88 Euros, if currency trends continue and the Euro and Dollar hit parity, which many think will happen as a result of EU QE (or "parody" if you go by certain botched headlines), I can sell that debt for 100 Euros down the road even if the actual price and yield of the bond in question don't change at all.  Pretty sweet deal.

Beyond all that, it's month-end, and there was a good amount of buying to hit month-end position requirements this week.  10yr yields made it to 1.637 at their lows and Fannie 3.0s topped out at 103-15.