The overnight session was almost completely unnecessary.  10yr yields climbed to nearly 2.08, apparently not willing to test yesterday's highs, and subsequently sank 2.03+, apparently also not willing to test yesterday's lows.  As far as 10's are concerned, the story of the past two weeks has been a quick rise from a 1.85-2.0 range to now hone in on 2.06 ahead of today's events.  Picture a pennant on a flagpole.  That flagpole was created by the rise in yields last Thursday/Friday and the "pennant" has been forming since Monday, beginning with the 2.09+ highs and yesterday's 2.03+ lows and ping ponging back and forth around the implied apex of the pennant at 2.06.

We could discuss overnight market moving events such as a strong German Bund auction and mixed Euro-Zone economic data, but these matter not when compared to the "power" of the wait-and-see vibes that are driving the range mercilessly sideways ahead of today's events.  It's really that simple and any break of the pennant before at least the 5yr auction, but probably FOMC, is purely incidental.

All this, however, applies to broader bond market momentum (or lack thereof).  MBS have been a bit queasier by comparison with 3.5's, just now getting back to yesterday's latest levels after being down earlier this morning, vs 10yr notes being up a few ticks all morning.  MBS have been underperforming a bit since yesterday afternoon.  Even so, they too remain inside their range marked by 102-19 on the downside, though they've tested through this to 102-15 on Monday, 102-18 yesterday and earlier this morning, but 102-19 is certainly the modal limit and most likely technical candidate for a range boundary.  Incidentally, this also makes it a good early-indication "trigger" to increase one's lock bias.

Not much on tap until afternoon events with Pending Home Sales being the only morning release.  Actually, the 5yr auction is at 11:30am today to make room for the FOMC, so it's technically a morning event.  Then it's FOMC time at the regular 2:15pm (sometimes they're out a bit earlier or later), followed by the Bernanke Press Conference.  Things could get fairly volatile after that as markets figure out which way they're going next.