A green Friday it is then... 

Nothing needs to be repeated beyond that which AQ already made plain in earlier posts.  In short, the "explanations" floating around for the bond rally, while all pertinent and no doubt beneficial, are not the real reason we're moving up today. 

Speaking of moving up, take a look:

So we've managed to hold the high range in MBS and are currently finding support from an internal trendline created with this AM's highs and early afternoon lows.  More solid support, however, may come from yesterday's highs, which you can see correspond to the highs from this AM: 2 bounces and a bread through near mid-day.  If tsy's can "hang on" through the afternoon, the uptrend is a possibility, but there is some potential volatility ahread, indicated by the widening trading range of tsy's as the day has progressed past the 10AM mark.  Best case is the "lower low" portion of the downtrend, not the highest probability.  Markets need "digestion time" for these "new" yield levels.  3.8 (ish) would be a just-fine level to end out the day, likely providing MBS enough support from the yield curve to hold the high range through both closes.

Regardless, movements will only be meaningful if volume is uncharacteristically high for a Friday afternoon.  Stay tuned...