Two ways to approach today's session... With Fannie 3.5's at 101-05 and 10yr yields at 2.20, we're about mid-range vs yesterday's big moves--not bad, but fairly equivocal. No major swings either... So we're left wondering whether or not markets merely didn't get enough info out of the EU today (although maybe it's en route after hours), or if the domestic economic picture is perhaps a bigger piece of the pie than the recent Euro Zone focus would have us believe.

While we can't much speak to the former right now, we can at least take a look at impending events concerning the latter. To wit, we'll get Q2 Final GDP tomorrow, and of course Jobless Claims. Those hit at 830am and Pending Home Sales plays a supporting role at 10am. Then there's the last of the week's TSY auctions in the form of the 7yr Note at 1pm. For more details on the day's economic events, see the following:

(Reuters) - Euro zone leaders want private sector creditors to accept a writedown of more than 50 percent on their holdings of Greek government debt, a senior EU source said on Wednesday.

Such a 'haircut' would aim to reduce Greece's total outstanding private sector debt by around 100 billion euros, the source said.

In an effort to push through the deal, French President Nicolas Sarkozy and German Chancellor Angela Merkel are prepared to meet with private sector bankers on Wednesday night to negotiate face-to-face, the source said.

"The haircut will be superior to 50 percent, with 100 billion euros (reduction) of the Greek debt held by the private sector," the source said.

"The goal is to reach a Greek debt level of 120 percent of GDP by 2020."

It is unclear whether the private sector, represented by the Institute for International Finance, would accept such a large writedown.

Separately the source said Sarkozy would speak to Chinese President Hu Jintao soon on Chinese participation in the EFSF bailout fund. (Reporting by Julien Toyer and Yann Le Guernigou; Writing by Luke Baker)

"The Federal Housing Finance Agency today announced, in accordance with FHFA’s corporate governance regulation and Freddie Mac’s Corporate Governance Guidelines, two Freddie Mac board members, John Koskinen (Chairman) and Robert Glauber (Chairman, Governance and Nominating Committee), have reached the company’s mandatory retirement age and will be stepping down from the board at the end of the current term in February 2012..."

Read the announcement

Fannie 3.5's are flirting with 101-06, which is both a short and long term technical level. This makes reprices for the worse a bigger risk and indeed, one lender already repriced. More could follow as these lows are tested (more still if they're broken).

Granted, EU events/headlines could ultimately supersede any domestic economic offerings, but the 5yr Treasury Note Auction that just occurred is a net-positive for MBS (especially considering the recently shorter durations in MBS lining up better with 5yr notes than 10's).

Bond markets are rallying in response to the lower-than-expected yield (1.055 vs a 1.067 when-issued) and the better than average bid-to-cover (2.90 vs 2.74 avg). MBS bounced higher to 101-12 and 10yr yields are down to 2.139 from 2.166 before the auction. Reprices for the worse are no longer a risk at the moment. Further gains in MBS would shift risks toward reprices for the better. But there's still a lot of European uncertainty looming.

Lenders came into the day somewhat hedged for the expected volatility, so it's not likely that we'd see widespread reprices unless Fannie 3.5's get closer to 101-00. The 101-06 level could be a trigger for a few early adopters. Bottom line, MBS are near lows, currently 101-07 in Fannie 3.5's and reprice risk is greater than 0%. Stock lever very much in play.