Bond markets were moderately strong overnight, both at home and abroad, but the gains left Treasuries and MBS well within the narrow range that has dominated the approach of this week's big Fed meeting.  By the start of the domestic session, European and US bond markets sent the message that they were done making overnight gains.  Both German Bunds and US 10yr yields bounced excessively along their lowest levels from 8:30 to 10:30am and have been moving higher ever since.

"Higher" is a relative term here.  For instance, 10yr yields are only up from 2.164 to 2.178 currently.  So the story is more about the refusal to break through the lows than it is about any scary run higher.  MBS concur with the intraday losses being limited to 4/32nds from the highs, and even then, only temporarily.  Fannie 3.5s are back up to 103-23 vs 103-25 highs this morning.

If it was up to the traditional concept of the stock lever "stock prices and bond prices moving inversely," bonds wouldn't be so quick to avoid their best levels of the day.  Reason being: equities fell reasonably sharply at the open and have continued to leak lower from there.  but during the same time, bond markets have been drifting into slightly weaker territory as well.  Volume and volatility are too small to read much into the phenomenon at the moment.  It could be as simple as corporate issuance putting pressure on bonds and lighter liquidity into the European close.