Bonds managed to scratch out a 2nd day of "recovery" leading back from the highest yields in more than 4 years seen on Wednesday.  If you don't want to read more than 3 sentences, I can tell you that it looks like yield curve trading and technical levels in the 2s/10s curve were primarily responsible for the gains.  If you're in that 3 sentence crowd, see ya on Monday!

For everyone else, there's this:

European bond markets rallied once again in the overnight session, but this time, Treasuries didn't follow.  Instead, it was only after the GDP reading that the yield curve (gap between 2 and 10yr Treasury yields) began narrowing and promoting some buying in 10's, albeit eventually.  

I know "curve trading" is not a very glamorous or satisfying piece of analysis.  Simply put though, while the GDP headline number was good, the consumption-related underpinnings were weak.  Curve flattening is all about such things and it was no surprise to see that response at 8:30am.  10yr yields sold off at first (2s sold off more--hence the flattening) due to the stronger headline but found support in line with yesterday's low yields.  From there, the flattening trade favored buying of 10s, and slower-paced buying of 2s.

MBS ended the day up nearly a quarter of a point and 10s finished down 2.4bps at 2.96%.  Notably, this is right in line with last week's closing high yields.  That makes this week sort of a wash, and leaves next week in charge of confirming or rejecting a break above 2.96%