This morning's data was not supportive for bonds.  But the overnight session kicked things off in a bad direction even before that.  What we've seen since then is a combination of a rallying stock market and bond buyer caution leading up to the FOMC announcement at 215pm Eastern. 

Fannie 4.0's are down 22 ticks on the day at 99-18 while the 10 year yield is up 10.1 bps at 3.379%.  Both had extremely choppy mornings and have since seemed to draw on what looks to be support (is there such a thing for bonds these days?!) that coincides with a 10yr yield of 3.39.  But current levels of 3.37 have also been fairly technically active in the past 48 hours.  Take a look...

And then of course there's the dotted teal line which is the 62% retracement from the long term chart.  So what this will ultimately look like on long term daily charts is a test of that retracement level, and the chart above takes you front-row center to see the gritty details of how the fight for 3.34 closing levels is playing out BETWEEN the 3pm bond market closes.  3.37 and 3.39 just happen to be the more "testy" intraday levels, and are merely players in the drama surrounding 3.34. 

As for MBS...  in  a similar fashion to treasuries, 4.0's are just slightly worse than their weakest levels from yesterday.  We're looking to benchmarks at this point however as today is about big picture.  MBS may meander closer or further from benchmark treasuries, but the key technical level to watch is 3.34 in 10's.  A firm close under is good and vice versa regardless of what MBS prices do for the rest of the day.

With the existing weakness, reprices for the worse have been seen.  High potential for market movement at 215 eastern which could either help us get some back, or print us an early hall-pass to get to the bars!  Stay Tuned!