• Treasuries were under pressure from a correction in European markets (stocks and bond yields higher) overnight
• MBS and Treasuries opened noticeably weaker.  MBS ticked painstakingly higher while Treasuries held flat
• Data was overlooked and end-of-week tradeflows set the tone early
• In general, it was still a good day for bonds, with closing levels being the 2nd best this week, behind Thursday.

Bond markets hit the 3pm CME close in solid shape on the week with 10yr yields at 1.721 and Fannie 3.0s unchanged on the day at 102-29.  That's roughly a 6bp drop on the week for Treasuries and more than a quarter point gain for MBS.  With those factoids in mind, we can forgive the 10yr note for rising roughly 3bps on the day, especially considering that 1.72 was the low end of our target range for the week.

Oil prices are quickly fading from prominence in terms of bond market motivations as European markets play an  increasingly important role.  Case in point, German Bunds came close to new all-time lows on two occasions this week, and European stocks were unable to break back into last week's higher range.   Stocks are looking very queasy at recent highs, and bond markets are certainly making sure they're in a position to capitalize on the big stock sell-off that may or may not happen.  The resistance levels in this chart from earlier in the week remain unbroken today.  If anything, they've been reinforced.

Domestic stock averages are also looking very queasy.  As stocks continue stalling near 2-month highs, the case continues to grow for the bigger picture, 7-year cyclical shift seen in the chart below from earlier this week.   Meanwhile, bond markets are making sure they're in a position to capitalize on the big stock sell-off that may or may not happen.