This isn't a full-blown "negative reprice alert," but there's enough of a deviation from earlier MBS activity to put the word out. 103-02 in Fannie 3.5's has seen some action as pivot point over the past few sessions, capping prices in the first hour of trading and then taking on a generally supportive role into the afternoon. It had been no different today, but we just saw our first tick down to 103-01.

10yr yields have bounced moderately higher off mid 1.95's up a scant bp and a half to 1.970, MBS have regained 103-02. If things get no worse from these levels, reprice risk would stay relatively low, but if things deteriorate further, some of the characteristically early reprice crowd could consider recalling sheets for the worse.

Again, this is an early warning, more for purposes of attention and vigilance than to predict a change.

A cursory glance at 3yr auction bid-to-cover statistics seems to indicate that today's 3.73 is either record or close to it, even if only a small improvement from last month's 3.62. The street expected this one to be well bid and it was, stopping through at .370 vs a .373 1pm WI, a bit better than the .20bps recent average.

Indirects took just over 38%--in line with the last 3 auctions that have ranged between 37.8 and 39.1. We're a bit surprised to see that indirects are "only" 38% considering Euro-Drama™. That could speak, in some small way, to a bit of pent-up stateside demand for the short end by way of correction to recent flattening and/or curve concessions for tomorrow's 10yr and Thursday's 30's. We're admittedly reaching here, but will be happy to bring this up tomorrow if 10's are weaker by comparison.

There's a palpable lack of excitement in bond markets today despite improving volume. One might consider the highest S&P levels in more than 4 months somewhat exciting, but apart from not being a bond-market phenomenon, stocks are just sort of grinding against that 1280's/1290's ceiling without much of a convicted move higher. Either way, bond markets are doing their best to shrug off the implications of rising stocks, something they've excelled at since the Euro-crisis began to pick up steam in Q411.

None of the data this morning has been impressive and has done little to motivate the price action, playing second fiddle to the EU "risk-on" trade brought on by overnight events already mentioned as well as recent comments on Greece's prospects for survival from EU's Rehn as well as comments on a solution for Hungary from the ECB's Nowotny. Apart from from this, dealer positioning/re-positioning ahead of the 3yr Auction today and 10yr Auction tomorrow balanced with various daily Fed POMO's and the technical backdrop is enough to keep things exceedingly boring.

But perhaps that will change soon? Even if we don't take a quantum leap of excitement, perhaps the triangle forming below (see link) will break by tomorrow afternoon and give way at least to a test of some horizontal range boundary: