A trend channel is a set of two parallel lines connecting the highs and lows of a charted security.  One way to visually describe a trend channel without a chart in hand would be to say it looks like railroad tracks.  (If you already know where I'm going with this, I truly apologize, but I'm going there anyway.) 

2015's bond market movement has adhered to such a trend channel.  Rather than use mere train tracks to describe 2015's channel, it might be more fitting to say it is like the rails of a crazy train (yeah... sorry.  I'm going somewhere with this). 

It's not too terribly different from any other trend channel, but this one has been crazy due to the unexpected twists and turns happening within the boundaries of the train tracks.  In other words, there's a long term uptrend intact in 10yr yields (our best big-picture proxy for the interest rate momentum that affects MBS/Mortgages), but the trading activity taking place inside that broader trend has been volatile and it's covered a fairly wide range of yields. 

Up until this week, it looked like momentum had been building (teal line) that ran the risk of pushing us off the rails of this crazy train, and in an unfriendly direction to boot.  But drama in Greece, China, and wherever else (Suggest a country!  No one will argue with you!) caused yields to go off that even crazier rail (teal line), thus returning to the midpoint of the bigger-picture trend--give or take.

I think that the positioning in the relative middle of the long term trend is important ahead of this big European weekend.  Throughout this process (Greece), I've maintained that it's nothing more than a brushstroke in the bigger picture.  I still think that's true and will continue to be true unless we see one of the less likely, but more dramatic scenarios play out in Europe.  To be clear, those scenarios (scary, systemic contagion, etc...) are technically possible, but not as likely as they were in 2011-2012.  For the sake of balance, I'd note that some folks see them as more likely this time around.  I think they're wrong, but I could be too.

But even if we don't get a dramatic scenario, there is plenty of room on this canvas--plenty of room between the rails of this train for things to get crazy indeed.  Next stop?  2.60 or 2.10, and I think the train leaves the station first thing Monday morning.  That's not to say yields will get there in a day (look at the recent traversals of the range to see about how long it takes), but any substantive result--positive or negative--out of Europe this weekend will likely set our course.

This then, is the last day to get off the train before it (potentially) gets crazy.