After the last visit to May's weakest levels (last Wednesday morning), MBS and Treasuries have been in a fairly linear trend back toward stronger levels.  But as we approach those levels, bond markets are visibly having second thoughts.  It's all right here in this easy-to-read chart:

I would hesitate to read too much more into the current state of affairs.  There are logical reasons for a positive correction within the range.  Those reasons have existed for a few weeks now and the light at the end of the tunnel in terms of May's debt supply (Treasuries and Coroporate debt) helped them translate into the move we've seen over the past week.

It continues to be the case that Europe's participation is required when it comes to mounting any major offensive back toward lower rates.  German Bunds have been in the same sort of linear downtrend, and have encountered the same sort of range resistance.  The takeaway is that we're still technically "in the woods," although we're right edge where the light begins to shine through.  It likely won't be until next week that we either confirm our dash to safety, or get dragged back into the woods by some evil creature we can't see lurking in the shadows.

All of the above is a slightly bigger picture view.  Shorter term, we had weaker Jobless Claims this morning, which didn't help much and stronger Pending Home Sales data, which didn't hurt.  Two paradoxical trading reactions reinforce the reality: trading is frequently disconnected from economic fundamentals right now.  Supply considerations and month-end trading are compounded by light liquidity to create the movement we see.  All told, it's a light day.  Markets are more interested in next week.