Bond markets started the domestic session in line with yesterday's latest levels, which were also yesterday's lows.  Trading levels maintained a somewhat volatile sideways pattern until the 9:30am stock market open.

At that point, both sides of the market came alive.  Stock futures were calm overnight and leading up to 9:30am, but the opening of the 'cash' market at 9:30am brings a major glut of liquidity in a much more profound way than we see in Treasuries.  In other words, the 9:30am stock open can be a market mover of its own accord, simply because it marks the arrival of the full traders guest list for the day.

That was the case today and it worked to bonds' advantage.  MBS began moving steadily higher--even managing to outperform Treasuries--and didn't let up until 2pm.  Even then, there was no reversal of the gains--simply a sideways drift toward the close. 

The only significant bond-market-related news of the day was a speech from Fed governor Dudley with positive undertones for bonds and potentially negative implications for stocks.  Either  that or stocks were simply negative and market participants forced Dudley's comments to fit into the existing trading patterns.  Whatever the case, Dudley's comments didn't hurt and the big story for the day was clearly the stock/bond interaction, which we could observe well before Dudley ever hit the wires.