Today was a classic "inside day," meaning that the entire range of trading took place inside yesterday's trading range.  As far as domestic hours are concerned, it wasn't even close.  10yr yields continued holding the 2.13-2.20 range (doesn't include the run above 2.20 that occurred after the 3pm close yesterday) and Fannie 3.5s held well within their 103-20 - 104-00 range (tested the lower boundary yesterday afternoon).

The inside day is an understandable byproduct of a market that remains open to moving in either direction depending on some future trigger.  In the current case, it's infinitely possible that the trigger will be economic data.  It would be no surprise that we didn't see things get too crazy today considering economic data wasn't too inspiring, for better or worse. 

Despite the fact that ISM Manufacturing is a very capable market mover, today's didn't have much of an effect after coming in at 51.1 vs 52.6 forecast.  Afternoon comments from Boston Fed Pres. Rosengren helped the entire yield curve end the day closer to stronger recent levels.  Rosengren said the Fed could hit near-zero rates with more frequency in the future, given the global growth outlook.  He also said the absence of success on the Fed's inflation mandate is one reason to keep rates fairly low and that China/Europe/Japan weakness could all contribute to further disinflation.