Every Friday, the CFTC issues a report on trading position in Treasury Futures (and everything else in the commodities futures/options complex). Here's a link if you want to explore the rabbit hole, but I'll cut to the important part and save you the time.  

Following the US presidential election, net short positions (traders betting on rates moving higher) began ramping up fairly quickly.  That trend shifted in late April and Treasury traders have been "net long" ever since.  When those net-long positions build up to their higher levels, it's not uncommon to see a corrective day or two of weakness.  This was the case in the week ending May 26th, which saw net-long positions at their highest levels of the year.

The position data is recorded on Tuesday and reported on Friday, so we assume any major weakness that follows a big "net long" report on Tuesday has at least something to do with a correction of the positional imbalance.  With all of the above in mind, the CFTC data from this past Tuesday (reported on Friday) showed another abundance of long positions (bets on rates moving lower), and some signs that a liquidation was already underway as of Tuesday.

Bottom line, recent weakness in Treasuries (and by extension, MBS), was exacerbated by this positional wash-out.  To be sure, the main motivation was the weakness in European bond markets, but that initial jolt started a domino effect for trading positions.  Traders then took the opportunity (or were forced) to reset.  2.305% is one of the first places traders would look to get back into the market.  In other words, traders who closed their long positions (i.e. sold Treasuries) might consider buying again at current levels.  

2.305% isn't the only option though.  Traders could want to see some more weakness before "buying the dip" (in prices).  Whether or not that turns out to be the case may have most to do with this week's economic data.  With that in mind, there are several relevant reports, beginning with today's ISM Manufacturing PMI at 10am.  

Relevance of the trading action will be somewhat questionable, however, due to the holiday.  Bond markets close early today and are fully closed tomorrow.  This means staffing levels are lower than normal.  Liquidity will be lighter. and that could mean we're not necessarily getting a truly representative sample of trading among those who remain at the desk.  The nice thing about thinly-staffed vacation weeks is that the range boundaries preferred by traders tend to remain in place, with the main side-effect being more random volatility in between those boundaries.  

The first order of business for this week will be to feel out whether 2.305%-ish is an upper range boundary or if we'll need to see something a bit higher before bonds are tempted to bet on rates moving lower again.