The trading day began mostly uneventfully, with bond markets working their way into positive territory by the domestic open.  Economic data didn't stand in the way of the gains.  The last major test for that came at 9:15am when Industrial Production came out slightly stronger than expected.  For a few moments, it looked like we might be seeing a turning point toward weaker levels, but MBS/Treasuries bounced before making any new lows (or 'highs' in the case of yields). 

Just over an hour later, any assessment of the morning movement would look silly and insignificant.  A batch of headlines out of Ukraine sent markets reeling.  Here's a recap (all headlines from Reuters unlise otherwise specified):

• Ukrainian troops shelled from Russian territory, says Ukraine spokesman -BFW
• Ukraine engaged Russian armored column on Ukrainian soil and "part of it no longer exists"
• Ukraine President tells British PM that Ukraine destroyed part of Russian armored convoy that crossed border during the night
• Russian spokesman says Ukrainian forces engaged in intense fighting to stop humanitarian aid. 
• Related to above headline: Russia says it's getting info of direct threats to aid convoy. Ukraine forces may be planning to mine road to Luhansk -BFW 
• Same spokesman says Russia is talking with Ukraine about humanitarian aid.
• EU ministers would consider any military action by Russia as blatant violation of international law
• Russia border crossing was "serious problem" for Ukraine -Reynders - BFW (note: 'Reynders' is some Belgian politician you've never heard of)

These were disconcerting enough and evenly spaced enough as to keep a steady rally intact for bond markets.  At their best levels, 10yr yields were as low as 2.303, and have only backed up to 2.315 since then.  MBS are 3/8ths of a point higher on the day with Fannie 3.5s up to 103-00.  Most lenders have repriced positively. 

While these things sometimes do bounce back, it's not an unsafe assumption that such a bounce would be limited in this case, by the potential for the situation to deteriorate over the weekend.