For some reason, yesterday's recap didn't go out.  You didn't miss much.  I wrote a bit about how I roll out of my high tech cryo-stasis chamber each morning and check a custom alert I have set on MBS Live for a 4:30am market update.  If the 10yr is less than 2bps off (0.02) from the previous session, I might sleep until 4:45am!  I almost did that yesterday.  I saw a 9 and a 2 and figured we were 0.0092 lower at the time.  After a double take, I realized it was 0.0920% and thus time to get up.  Bu the end of the day, however, bonds were all the way back to 'unchanged' levels.

Today began more innocently, with bonds almost perfectly unchanged.  Selling started around 9am and was driven by European bond market weakness (German budget/bond issuance concerns coupled with Italian political drama).  By mid-day, we were beginning to wave goodbye to our temporary home in the 1.6-1.8% range after a fun 4 day vacation.  In other words, yields were spiking and threatening to confirm a shift back toward higher rates.  10yr yields were all the way up to 1.793% for a moment.

But after 1pm, bonds came rolling back down that scary little mountain with the help of a reasonable 30yr bond auction and a few updates out of Europe.  Yields ended up 0.0020% lower than yesterday's latest levels--effectively unchanged.  So if you are busy enough to have only checked in around closing time on each of the past 2 days, bonds are totally flat!  The same can't be said for mortgage rates which are reeling from the volatility of all of the time in between.  They can't keep up with friendly rebounds in Treasuries right now and it will take weeks of increased stability for margins/spreads to return to more normal levels.