A frequent topic of interest over the past few years--and especially recently--is the trickle down effect from European bond markets to mortgage rates.  Treasuries typically react more to whatever is going on in Europe, and MBS are another degree removed. 

More often than not, Europe has been leading the charge toward lower rates, which means MBS and mortgage rates have seen the least benefit of the three.  But those tables have turned for the time being, at least for the past two days.  During that time, European bond markets have weakened, and domestic bond markets have been doing a better job of holding their ground. 

On both days, a sharp move higher in European yields has translated into a timid move higher in US yields.  In today's example, it was just enough to take Treasuries into weaker territory on the day, but with their extra degree of insulation, MBS have remained in positive territory.  The other way to look at the MBS outperformance would simply be to note the relative stability in Treasuries' trading range in conjunction with the general truth that MBS appreciate stability and tend to outperform when Treasuries remain mostly flat.

The morning's data has done little to inspire any movement.  Even then, there's not really enough movement to say it's been inspired by anything.  For the record though, CPI was slightly stronger than expected at the 'Core' (factors out food and energy) and right in line with expectations at the headline level (includes everything).  New Home Sales surged on a bounce back in the Northeast, but there were so few actual sales that the margin of error is massive--too massive to give much credence to the data (try 111%!)