Last Friday, bond markets made a small push back against the substantial selling spree on Wednesday and Thursday.  Unfortunately, it always stood some risk as being a temporary head-fake due to the influence of 'month-end' buying.  Now that the new month has begun, we're definitely missing that support as Treasuries are pushing into their weakest levels since September.  MBS are faring better by comparison with Fannie 3.0s still well inside Friday's range.

Bonds began the overnight session in decent shape, but were soon losing ground as European trading progressed.  Part of this could be chalked up to the decent data out of Europe, but the dominant story is that of the change in tradeflows for the new month. 

A tangential component of those tradeflows is the corporate bond issuance calendar.  The street has been blasted with no fewer than 12 new high grade corporate bond offerings.  Some of them are smaller dollar amounts, but they add up to an unexpectedly large addition to the "supply" side of today's bond market equation.  Higher supply=lower prices=higher rates.  This is part of the reason for MBS' outperformance (i.e. corporate issuance does more direct damage to Treasuries).

10yr yields are currently up 3bps on the day and Fannie 3.0s are down an eighth of a point.