Today was a fairly jarring and brutal ride for bond markets--a true example of the sort of volatility that we often consider, but seldom see on data-free Fridays with big technical levels nearby.  In today's case the nearby technical levels were well laid out in the the 'day ahead' post (and the charts were available on MBS Live's dashboard last night).  The following chart is an updated version of 2 of this morning's charts showing that  break of 1.84 quickly resulting in the battle around 1.90 in 10yr Treasuries, and the breakout attempt from the long term range being called into serious question.  In it's simplest form, today could be explained solely by the technical considerations in that blog post, but there were fundamental considerations as well, including the pent up selling demand left over from yesterday's inability to get to low enough yields to "distribute" the auction supply just picked up by dealers over the past 3 days (accounts buy at auction.  If rates go down, prices go up, enabling a quick potential profit).  Profit potential was quickly dashed as Bernanke offered no insight for bond markets this morning.  From then on, the infamous 'snowball selling' took over.

How you look at this is largely a matter of perspective...  One one hand, the first quarter of 2013 was "overdone" in terms of selling pressure and we're merely testing that 1.84 ceiling again (albeit, by an uncomfortable margin).  On the other hand, the month of April was "overdone" and we're getting back in line with the trend.  Or it could be somewhere in between, and much in the same way that bond markets may have been in a slightly too aggressive position heading into the last NFP report, so too could we be rushing to get in position for a better-than-expected Retail Sales report on Monday.  That third option is the quickest revelation as an unchanged or weaker report will see us quickly shuttled back down into the 1.8's.