I can imagine that bonds stepped on the scale this AM much the same way as I did.  Yes, the holiday's were good while they lasted, but things may be a bit too overweight this AM.

If you weren't around for the rousing Friday that was, the main event was the Dubai Drama in which the country essentially couldn't pay it's bills on time.  Given the billions of dollars on their tab, the debt markets sort of took notice--at least as much as they were able on a Black Friday.  These next few longer term tsy charts show the flight to quality that ensued, among a few other things...

10 yr tsy yields

Quite a lot of perspective offered here as we see the resistance and then THE RESISTANCE and though 3.0 feels a bit distant, perhaps it could then be THE RESISTANCE!  In other words, yes, yields are well through their long term resistance range in the low 3.3's.  But before moving any lower, resistance is offered at 3.2 or thereabouts which coincides with the last major, outlying challenge of lower yields.  So yes, a bullish breakout, but not in open field with room to run yet....

10 Yr Tsy Futures

Not much of a different story in futures.  We see the same aggression on Friday, followed by a reversal this morning, with all opens and closes remaining range-bound by a bullish trend channel

But zooming out more, we find our upside resistance.  And just like yields, though futures are through some shorter term resistance (lower yellow line), there's that same long term resistance (upper yellow line)--looking much more daunting--that has not even been touched.

Stocks

All the while stocks give mixed signals, which you can see by their breakout of 1100 but failure to breakout of 1111 in the next two charts.

MBS and Tsy's On The Day

All the preceding has provided the backdrop against which recent movements have played out.  Tsy's are fighting to stay below Friday's yield levels.  And though MBS aren't as close to their lows at 101-06, neither are they anywhere close to the highs at 102-22. 

So when the charts are showing a bit of indecision and evidence for both sides of the coin in most cases, what could be better than month end and NFP, among other things, to drive the indecision right out of the market?!  Chicago PMI is right around the corner today, but is the sole scheduled release.  The calendar will, however, build steam into week end with Friday bringing our old friend NFP.

Currently, MBS are down a tick on the day at 102-18.  10yrs are down 8 ticks at a yield of 3.24.  MBS are tighter this AM into tsy correction, but were wider on Friday.  Stocks have opened mostly flatter, and the 2's 10's curve is at 2.544