We expected to see some sort of consolidation of the late July bond rally this week. That's a fancy way of saying that markets would probably level-off and find a range, and maybe even trade an increasingly narrow range heading into NFP Friday. 

While the initial bounce off low yields from Monday would be the logical first part of that range-finding (setting a low point for the potential consolidation), the weakness that followed was a bit more vigorous than we might have liked.  It forced us to consider that we were simply seeing a reversal heading into August.

Thankfully, we're back in the green this morning, thus giving us the other boundary for the pre-NFP consolidation.  From here, it's far more likely that bond markets treat yesterday's weakest levels as a supportive ceiling in yields (or floor in prices).

As for today's market moving considerations, there are several in play.  The most overt consideration is the Bank of England policy announcement, which fueled an early-morning pre-market rally in Treasuries.  Actually, it was more of knee jerk where British yields led other core bond market yields lower, and then higher.  It was after they bounced lower again (before breaking above the day's previous highs) that the rest of the world got on board. 

This isn't to say that US 10's aren't capable of making their own decisions.  It's just that there isn't much by way of relevant inspiration today.  It's easier to swim with the tide of global bond market momentum, especially when doing so would help accomplish a pre-NFP consolidation in the domestic trading range. 

The spillover to MBS has been decent, but not great.  Fannie 3.5s are up just over an eighth of a point.