To say the EU Summit will dominate tomorrow's market movers is a bit ironic considering the mere expectation of its occurrence (and potentially informative conclusion) has already been the biggest market mover in the room for several sessions now. Indeed where today's bond-market-friendly gyrations originated and flourished. Will they merely bounce back tomorrow if the news out of the summit is not as friendly to bonds?

It's hard to say, but certainly, volatility is a risk in either direction. No new ground was broken today with respect to the broader range of 2.109 and 2.231 in 10yr notes. In fact, the fact that we're right on the edge of that frames today's rally as something of a "calculated move." Cold and logical...

Forget logic tomorrow though, it could be a wild ride. Then again, it could be anticlimactic. Durable goods hits in the AM as the only major US Econ data and of course the 5yr auction at 1pm remains a market-moving threat. The full run-down on data can be found here:

The gains in MBS today are now nearing "face-melter" status as Fannie 3.5's are up 20 ticks to 101-17. 10yr yields are 10bps lower, almost 11 bps lower at 2.217. All this on a combination of factors ranging from earlier headlines about a meeting of EU Finance Ministers being cancelled just ahead of tomorrow's summit, Italy on the skids, and technical momentum shifting. Rate sheets are easily due for another round of improvements at these prices, but we'd need to see them level off for a majority of lenders to get on board.

The timing of this morning's gains are potentially frustrating depending on the lender from whom you're hoping to see improved pricing. Some released rates well enough before recent gains that a reprice for the better wouldn't be out of the question. Many others came out a bit "too recently" for current gains to suggest reprices for the better.

So this is one of those situations where you'll have to "know your lender" and have some sort of idea of what past precedent suggests about their repricing behavior. We can tell you though, that Fannie 3.5's are up 14 ticks at 101-11 and 10yr yields are testing an important floor in the 2.15's (currently at 2.159).

Finally, there's the element of "suddenness" of this rally. It may keep going or it may bounce. Too soon to tell for sure, but so far, the reprice outlook is certainly positive.