Europe has been in the driver's seat throughout the day as far as domestic bond markets are concerned.  While Treasuries were doing fairly well as the overnight session began, it was news out of Europe that brought the lowest yields of the night.  At roughly 3:30am, the highest court in Europe finally got around to a ruling on the ECB's previous bond-buying plan (one it never used) the OMT ("Outright Monetary Transactions").   German Bund and Treasury yields hit their overnight lows shortly thereafter.  Even then, it was more of an artificial boost than a new source of momentum.  Markets would prefer to consolidate within the recent range ahead of the Fed.

Those overnight lows were re-tested once more after negative German economic data.  This gave us an opportunity to see where technical resistance (floors for yields) came into play.  In other words, after a certain point in a rally, we often see trading levels bounce at similar levels over varying periods of time.  For Treasuries today, that's clearly been 2.31%.  After bouncing there, bond markets calmly moved back up in yield, led by an even sharper move in Europe.  German Bund yields pushed back to their levels from before the European court ruling by the close, and that has marked the high end of the range. 

Left to their own devices, Treasuries and MBS (which have simply been following Treasuries during the domestic session) are looking reinvigorated with both making strong moves toward the best levels of the day since the European close.  If we break past those levels, it could turn into a pre-FOMC "lead off.'  Otherwise, we're just in a consolidation pattern--albeit with a positive skew--before making bigger decisions.