Bonds were slightly weaker in the overnight session.  European bonds set the tone early, potentially in response to Draghi comments on the need for fiscal stimulus.  US yields followed, but never at a pace that anyone would consider "alarming."

10yr yields were a few bps higher by the time the day's only data came out.  Chicago PMI was much weaker than expected (47.1 vs 50.2) with a quarterly average at its lowest level since 2009.  That was good enough for small but immediate improvement in bonds.  Both MBS and Treasuries made it back to unchanged levels or better after the data.  The rest of the day was spent drifting sideways to slightly stronger.

Tomorrow brings more consequential data in the form of ISM Manufacturing (expected at 50.1 vs 49.1 previously).  Based on today's trading range (and the fact that it keeps bonds in the consolidation pattern we were following last week), a technical breakout is getting to be a sure thing.