Any time rates have been trending decidedly higher (as they have been since mid-April), every day of gains has the potential to become the turning point in the trend.  By default, we have a certain amount of improvement we need to see before concluding the negative trend is over, but two days with the same amount of improvement can mean very different things depending on when they show up.

For instance, a green day in the early stages of a negative trend has less of a chance of being a meaningful turning point.  The same goes for small improvements that follow multiple successive days of selling.  Such small days tend to be mere "corrections" to the prevailing momentum. 

So far, today is taking the shape of one of those incidental corrections, but it could turn out to be something more meaningful if one of two things happens.  The first point of interest is this afternoon's 10yr auction.  It has the potential to reveal something about trader positioning.  Yields have risen noticeably since the last auction and if traders view current yields as a good value, today's auction stats stand a good chance of communicating that.

As such, if we're rallying significantly after the auction, it's another feather in the cap of a potential technical bounce.  Ideally, we'd need to see another day of strength tomorrow in order to confirm we're making a run at defeating the prevailing uptrend, but any move to or through 2.34-2.35% would be a strong start.

The other potentially positive turning point for the domestic rally would be a bounce in European bond markets.  In general, the  "lower highs" (white-dotted line below) in German Bunds in recent weeks have helped US bond markets avoid making a bigger reentry into their previous range (thinking about 2.42% as an intermediate ceiling here).  A continuation of this downtrend in European bond markets would help solidify the shift into the recently lower range marked by US 10yr yields below 2.30%.

Caveat: all of the above lays out a fairly bullish case.  The bullish case is not necessarily more likely than the bearish case, but I figure we've talked enough about the bearish case recently.  The concepts above help provide a framework for assessing a shift, in the event that this positivity sticks around.

Final note: today is a "roll day" for Fannie and Freddie 30yr fixed MBS.