With today's modest gains, bond markets did exactly what they need to in order to keep the medium term momentum technicals perfectly flat (that flatness was discussed in the Day Ahead, if you'd like to read more about it).  That commentary mentioned bonds being "done for the holidays" in the title because the following week tends to be anyone's guess when it comes go market movement. 

We've seen Thanksgiving weeks that have been awesome, ugly, and perfectly flat.  In almost all cases, the motivation for each of those movements is nowhere to be found.  It's a random walk based on which traders are trading and whether or not they are actually trying to accomplish something on a week known for it's light liquidity.

As for today, it started out with yields and MBS prices in roughly the same spot as yesterday's close.  Bonds began to improve after the Housing Starts data (but not because of it).  After all, that wouldn't make much sense considering the data was stronger than expected. 

Instead, it was simply one big trade in the Treasury futures complex that provided inspiration for other traders to follow suit.  No one but the trader who made the trade knows why it was made, though "weakness in European markets" is a fair enough guess considering European yields and stock prices were falling at the time.

After Europe closed, US bond markets traded mostly sideways for the rest of the day, ultimately maintaining a 3bp improvement in 10yr yields and a 3/32nds gain in Fannie 3.5 MBS.