Despite a much stronger-than-expected Philly Fed report, bond markets didn't lose much ground after 10am.  Earlier in the morning, weaker Housing Starts data helped strengthen an overnight rally.  The original strength is thought to be a factor of increasing geopolitical tensions between Russia and Ukraine.  That said, history suggests remaining skeptical of market movers that seem to be exclusively responsible for a surprise move.

Other factors in play include German Bund Yields making new all-time lows, and the shooting-down of a Malaysian passenger plane near the Russia/Ukraine border.

In the past half hour, Treasuries have stampeded to 2.476 and MBS have shot up another 5 ticks for 10 ticks improvement on the day.  Fannie 3.5s are currently up to 102-13. 

The Malaysian Airliner story is getting the lion's share of attention and credit for the market spikes, but we'd note that the initial wires came out before the move was underway.  Delayed reactions of this magnitude are uncommon, but technically possible.