Treasuries were stronger overnight as substantially downgraded Eurozone growth forecasts pulled yields lower.  Interestingly (or 'suspiciously') enough, there was a big block trade in Treasury futures (rare for that time of night) less than 2 hours before the forecasts were released.  Either way, both the block trade and the forecasts were positive for Treasuries.  MBS consequently opened near yesterday's highs.

Gains reversed heading into 930am opening bell for stocks.  This has been a frequent turning point for overnight gains lately, but it could have been exacerbated by continued corporate debt hedging activities (big firms issuing their own bonds often sell Treasuries as part of their hedging/pricing process).

A Reuters exclusive on strife within the European Central Bank helped get bond markets back on track around 10:20am.  That said, 10yr yields had already put in a solid technical bounce just under 2.35.  They're currently back down to 2.32 and Fannie 3.5s are up 3 ticks on the day at 103-11.