Open up MBS Live today and you'll be greeted with plenty of reassuring green numbers and positive reprice notifications.  Unfortunately, those reprices were taking mortgage rates from moderately higher to slightly higher.  The only substantial gains were seen in the Treasury market, and it's debatable whether they could be referred to as 'substantial' in the first place.

10yr yields were down 2.3bps at 2.504%.  That equates to nearly a quarter point in terms of PRICE.  Meanwhile, Fannie 3.5 MBS only managed 2 ticks (0.06).

Early weakness came courtesy of stronger German economic data, but it was soon offset by domestic data with Chicago PMI leading the charge at 9:42AM.  There was also a fair amount of organic bond buying at the 9:30am NYSE open, and again heading into the European close.  This suggests a bit of a reversal in month-end tradeflows from those seen yesterday.  Speculative traders who bet on higher rates yesterday were forced to cover due to the month-end buying and economic data-driven bond gains.  

Of course that's quite a lot of explanation for a modest 2.3bp move that failed to break any technical levels.  So we could just say bonds were relatively flat and continue to wait on the 3 most important days of this week for much bigger guidance.