First of all, volume has been every bit as excruciatingly slow as expected, both at home and abroad. The most important factor here is the absence of NFP (and most of next week’s data for that matter). It’s essentially reduced bond market trading to a passionless attempt at self-preservation rather than a venue for any sort of risk and reward based on economic fundamentals.
There’s really nothing to observe at the moment. Treasuries were just slightly weaker in the first part of the overnight session, strengthened into the Asia/Europe hand-off, and have since traded a linear trend channel back toward weaker levels. All of this has taken place with little-to-no regard for equities markets or anything at all really. Again, traders are trying to run with the pack.
10’s are currently up 2.3 bps at 2.6283 and Fannie 3.5 MBS are down 5 ticks at 101-26. Given yesterday’s relative strength, today’s weakness doesn’t violate any range boundaries. There are no scheduled reports though there will be a few Fed speakers by the end of the day.