Data, headlines, volatility, volume... All very quiet in the overnight session and into the first hour of the domestic session. MBS and Treasuries both improved on the "bounce back" gains seen yesterday afternoon, but are by no means guaranteed to continue improving today.

The frustrating thing about today's trading is that if volume stays on the current course, the actual fluctuations we see in price and yield won't necessarily the best indications of true market sentiment. As we said yesterday, we were left with the impression that the week was effectively over after yesterday morning's trade barring some significant and unexpected piece of news, most likely of the European variety.

Shifting to metaphor mode, bond markets have run their race for the week and will now do their best not to crash on the way back to the pits. For MBS, that means an attempt to hold onto 103-10 technical support today as a better-case-scenario, but we wouldn't be overly disheartened to end up slightly lower (especially considering yesterday's support level 103-00).

Technicals in Treasuries are a bit less clearly defined. Worst-case, we'd like to see 2.045 hold as a supportive ceiling, but would prefer a break below Thursday's highs at 1.998. Unfortunately, the first test of that pivot point saw yields bounce higher to their current levels around 2.01. Fannie 3.5 MBS are currently up 4 ticks on the day at 103-11.