This will largely be a rehash of the morning update that MBS Live members have already seen, as we haven't been treated to the morning volatility that's been so prevalent of late.  Screens are green today--calmly and increasingly.  To what do we owe this welcome reprieve?

First of all, revisit this post.  That sums up what generally may be happening around current levels.  While it is possible that bonds are merely consolidating for a move to higher yields still, it's equally possible that some of the signs of support we've been seeing are just that--supportive. 

Volatility and uncertainty have been high enough in general that we shouldn't expect narrowly defined technical levels to hold perfectly true.  It's not uncommon to see this sort of "messy ground-holding" that merely circles and bounces around a general zone of yields.  That would be an apt definition for what's been going on in the 2.25-2.35 zone this past week and a half. 

One of our biggest issues (no pun intended) of late has been corporate issuance.  It's ebbing a bit today, and that's helping us hold ground.  When combined with the notion that today is the last Treasury auction of the week, there is the proverbial light at the end of the tunnel when it comes to an ominous batch of new debt supply (Treasury auctions + corporate issuance = more supply than demand for broader bond markets).

Top it all off with Germany being out for the day and the European yield roller-coaster is having much less of an effect today.  Granted, we never know how the afternoon will turn out, but we can know that we'll likely find out after 1pm.