• Quiet overnight session and AM hours
• unfazed by sharp gains in oil prices
• bonds rallied into the afternoon and especially after the auction
• 10yr yields tagged 1.72 resistance before leveling off into close
• MBS gained 3 ticks

Bond markets had a great day--not necessarily in terms of outright gains, but insomuch as they continued to operate near the lower boundary of their current range.  In fact, 1.72% had been labeled as "max resistance" (kind of like a sub-floor below the floor) just a few days ago and 10yr yields hit 1.7210 following today's auction.

Is it ominous, then, that yields bounced right at that floor level?  Maybe, but it certainly doesn't have to be.  We've seen plenty of examples of rates "staging" near a lower bound before they break through.  Whether or not that's the case this time around remains to be seen, but the point is that an intraday bounce at the lows doesn't spell doom.

One thing's clear: bonds are playing their own game right now and refuse to be dragged around by other markets--especially oil and stocks.  If anything, it was stocks that followed bond yields lower this afternoon.  Oil isn't even in the running for correlation today.  Prices spiked following the 1030am inventory data and bond markets barely budged in acknowledgment.