We haven't seen a whole lot of volume behind the current moves, but they've certainly been in the right direction. Fannie 3.5's are up 4 ticks on the day now at 102-17 and 10yr yields are testing their lows of the day in the mid 2.24's.

It's too soon to tell if bond markets will have any more follow through on this visit to the day's best levels, but we don't yet have any reason to believe they will. Generally positive afternoon though, and some lenders might acknowledge that fact with a slightly improved rate sheet. This becomes more likely the longer 102-16 is held as support or the more prices improve from here.

Not much to report that can't already be seen on the charts. In the grand scheme of things a range of 102-10 to 102-16 is quite narrow for Fannie 3.5 MBS recently, as is the range of 2.25 -2.285 for 10yr yields. Each of the above bounced off their stronger levels recently, though have not moved back to the opposite end of the spectrum.

That leaves Fannie 3.5's UP 1 tick on the day at 102-14 and 10yr yields grinding around 2.25's. Naturally, being closer to the better levels of the day alleviates the reprice risk that had been picking up stem into the noon hour. Whether or not positive reprices are now more likely remains in question. We'd leave it at this: it's not out of the question that we could see a positive reprice, but it would become much more likely with a break above 102-16. We're effectively stuck in neutral at the moment.

Rather than an out-and-out "reprice alert," we'd say that it's a good time to be watching more closely for the next discernible move in 10's and MBS. The former has indeed pushed into new highs for the domestic session, up into the 2.28's. As hoped, MBS continue to do a good job holding their ground as long as 10's stay below 2.29, but we can see signs of their growing discomfort with benchmark yields creeping higher.

10's are currently at 2.284 and Fannie 3.5 MBS down 4 ticks at 102-10. As it stands, and depending greatly on the time of a lender's initial rate sheet, there could already be some risk of negative reprices at the 102-10 level considering the 102-15's seen just before 10am this morning. Those are limited, however, in probable magnitude and participation.

We're looking to 10's for a bit of guidance here. To that end, they're at sort of a crossroads where they'll either have to break higher in yield, or put in yet another bounce lower. If they break higher, MBS are at risk of losing a few more ticks, increasing the chances for negative reprices, whereas a break lower would alleviate the current reprice risk.

After rallying for the first 1.5 hours of the day, Treasuries abruptly lost momentum owing to a lack of sponsorship below 2.24. Where else to go then, besides back from whence they came? 10's have done exactly that and just put in a bounce at yields roughly equivalent to opening highs near 2.28.

While 4bp swings in both directions inside a 3 hour time frame speak to the relatively more volatile morning, MBS are doing much better by comparison. Fannie 3.5's are down only 2 ticks on the day at 102-12 and unlike Treasuries, haven't ventured back toward their weaker levels of the morning in the lower 102's.

Pending Home Sales was a non-event in terms of market-movement this morning, as Treasuries and MBS are opting for a range trade against the backdrop of the lightest day of scheduled events this week.

We're not too troubled by Treasury weakness if it continues to find support at 2.29 or below as the 2.29-2.26 zone is our leading candidate for THE pivot point of the "new range." Really, anything between 2.29 and 2.21 is akin to a more equivocal range-trade between what are generally regarded as the extremes of the new range at 2.1-2.4. Maybe that's why MBS aren't too troubled by the Treasury weakness either (psychologically speaking). Stay on guard against a 10yr Treasury move into the 2.29's though as we'd expect MBS to reconsider their resilience in such an event.