Although MBS and Treasuries have recovered from their weaker levels of the morning, both sides of the market have had a tough time trying to rally back through morning levels.  Volume is fairly lackluster and we get the impression markets are waiting on Greece and NFP, as indicated in the earlier alert from MBS Live. Given the fact that market levels are relatively similar and that there's been no material change in our assessment of the morning's trading, here's that alert in its entirety.

Bond Markets Open Flat, Move Slightly Weaker Following Econ

(MBS Live) 9:09AM - Stocks and Treasury yields trudged noncommittally higher overnight with 10yr notes trading into the 1.97's before falling back to unchanged by 8am on news that Greece only had 39% of private bond-holders committed to the private-sector-bond swap ahead of Thursday's deadline. MBS opened dead even with yesterday's latest levels. 

An ADP Private Payrolls report that just barely beat expectations was apparently enough for Treasury yields to back up to overnight highs and for MBS to fall briefly to yesterday's lows before settling in around 5 ticks weaker at the moment at 103-16. 

Key pivot points for MBS lie at 103-23 and 103-10, but 103-18 has also been a reasonably well-traveled price level, seeing it's fair share of ceiling/floor bounces. 

The Productivity and Costs report is also assumed to play some small role in this morning's bond market weakness with a slightly better than expected read on productivity and a significantly higher-than-expected "unit labor cost" component, +2.8% vs a +1.2% consensus. 

What we're essentially witnessing is minor bond-bearish bounce that undoes a moderate amount of yesterday's gains, but not a runaway reversal in momentum. To be clear, momentum is decidedly sideways, holding out for clearer indications from the Greek debt swap and of course, Friday's NFP. 

So far this morning, 10yr yields have managed to hang on to a ceiling bounce just slightly lower than yesterday's first example of a similar ceiling bounce. Today could be on the volatile side, however, with little else on the calendar left to inform directionality and contending with technical gravity pulling 10yr yields back toward their linear regression line to the last NFP report, perfectly flat at 1.983.

Keep an eye out for a meaningful break of that level as well as the previously mentioned pivots for MBS as milestones of deterioration in the case of 103-10 or improvement in the case of 103-23.

We mention overnight trading fairly regularly, but have you ever wondered exactly what we mean or what that trading looks like?  Last night was a fairly decent example and I thought it was interesting to note how very different the charts can look if we're privy to the trading hours occurring BEFORE 8am New York time.  Here's a brief mark-up:

Particularly, note how light volume is between 3pm yesterday and 8am today.  This session was on the lighter side of normal, but relationship to domestic trading hours volume is fairly typical.

One last chart to share would be give a visual aid to the brief mention of the "linear regression to the last NFP report."  All we're really looking at here is the straight line that perfectly bisects an equal number of data points on this hourly chart of 10yr yields, beginning with the Monday following the last NFP report in early February.  The moral of the story is that 10yr Treasuries have been perfectly flat since then and that current yields are fairly close to that midpoint.  All this is just meant to build the sense of "sideways and waiting."