Monday's volume was as light as it's been since early April.  Markets took a breather following the intense events on the last three days of the previous week.  There was no significant scheduled data and participation was noticeably lacking, not just in the sense of volume, but even warm bodies in the trading world were simply absent.  Sometimes the calendar clearly suggests the least disruptive weeks for periodic vacation opportunities throughout the year and for many market participants, this week is one of them. 

Life goes on for markets today, but just barely.  Once again, the scheduled Fed "Twist" buying is currently the front-runner for market-moving potential in the domestic session as the morning data calendar is empty.  On a brighter note, there is some Fed-speak from Bernanke in the afternoon, as well as a third tier economic release in the form of Consumer Credit.  The Treasury Auction cycle also begins for the week with 3-yr Notes, but these have had very little, if any impact on longer-dated Treasuries or production MBS since the debut of ZIRP verbiage ("zero-interest rate policy" with a specific date target mentioned in FOMC Announcements). 

Beyond that, we have our eye on the technical landscape to whatever extent volume allows us to infer any significance there (wihich is not much).  In simpler terms, if we were just looking at charts, there's a noticeable possibility of further weakness in bond markets.  This would ultimately manifest itself as a V-shaped bounce from early July to the lowest apex of yields on 7/23-7/25 and then back up again to late June, early July levels.  To be clear, that last part is purely a possibility and not at all something we're necessarily planning on.  If, however, yields continue to rise, it could add credence to that technical possibility.  At that point, we'd have to take a look at volume to see if it's picked up enough to infer much significance.