MBS and Treasuries are essentially at their weakest levels of the past two days, fighting to hold that ground against a rebounding stock market and weak European bond market.  Both have taken their toll so far this morning.

Thankfully there was pronounced strength before the weakness set in, leaving us very close to unchanged territory.  10's were as low as 1.98 just after 6am.  Fannie 3.5 MBS opened much stronger at 104-06 and are now perfectly 'unchanged' at 103-26.

The relatively epic scale of movement continues to be a story of tradeflows and technicals.  In other words, the large-scale herd mentality has been much more relevant to market movement than, say, economic data or other fundamentals.  Case in point, the selling was in progress well before any of this morning's economic data and there was no discernible reaction to a very strong reading on Jobless Claims at 8:30.

As for the technical landscape, both Treasuries and stocks have set up a few inflection points overhead.  The longer they remain under these lines, the better.  Breaking above one isn't necessarily the end of the world, but it would suggest a more defensive stance today in exchange for future optimism.