Bonds had 3 fewer hours to trade on Friday, but ended up covering by far the most ground of any day this week. The rally was extreme in the moments following the US ISM PMI data, but had already covered a lot of ground due to overnight PMIs (and other data) in Europe. Long story short, cracks are showing in the global economy, inflation expectations are ebbing, and rates may be realizing they were a tad defensive in June. Of course all of the above will require vetting from additional data in the near future, and that's likely why the rally was quick to correct itself after 10s had dropped by more than 20bps.
Much stronger overnight on general global economic malaise. 10yr down almost 10bps at 2.922. MBS up 3/8ths.
Fuel meets fire after weaker ISM. 10yr down 20bps. MBS up almost 5/8ths.
Sharp but moderate correction after ISM-inspired rally. 10s ultimately retained 12.7 bps of gains after being down more than 20. MBS went out more than 3/8ths higher after being more than 3/4ths of a point higher at one point.