Bonds finally moved in a less friendly direction today after 3 solid days of gains.  The losses were logical, though, considering an absence of geopolitical headlines and an abundance of stronger economic data in the early domestic session.  In fact, it was that data more than anything that pushed yields higher and MBS Prices lower in the 830am-930am time frame.

Refreshingly, a surge in the stock market didn't do any noticeable damage to bonds.  That's not something we would have expected based on the recent trend of extreme correlation.  10yr yields managed to hold under the 2.425% technical ceiling with room to spare.  Fannie 3.5 MBS only lost an eighth of a point and never experienced any volatility after the initial hour of losses.

Tomorrow's data is limited, as is the entirety of next week.  Then it's a 3.5 day weekend for Memorial Day.  That means tomorrow may not be too soon for us to expect to see inconsistent trading and correlations as traders get positions in order for an extended weekend followed quickly by "month-end."