As expected, this morning's European Central Bank (ECB) Announcement has been a source of volatility for markets, but its effects have varied widely.  Most markets ended up rallying.  Nowhere is that more true than in European bond markets.  Stocks and oil also got a boost.  Treasuries, however, are stuck somewhere in between--pulled lower by falling Bund yields and higher by rising stocks and oil.

Of course, Treasuries have some of their own reasons for being cautious here as well.  After a quiet day yesterday, corporate debt issuance has picked up in a major way--most notably with a big deal in the pipeline from Coca-Cola. 

What's coke got to do with MBS and Treasuries?  When a big corporation issues debt, it's akin to the US Treasury issuing debt.  Investors put up the cash to own the bonds.  Increased supply elsewhere detracts some of the buying demand that would otherwise be seen in Treasuries and MB.  Additionally, the corporate issuance process often relies on the sales of Treasuries to protect against rising rates between the time the bond is conceived and delivered.

Because of that Treasury-specific hedging process, corporate issuance is less of a problem for MBS.  As such, it's not too surprising to see MBS in modestly positive territory while Treasuries are slightly weaker on the day.  The caveat is that shorter-maturity Treasuries are also barely holding on to gains--potentially a factor of Treasury announcing that the upcoming 2-yr auction would be delayed (debt-ceiling political posturing).