Bonds sold off today, but not excessively, and almost not at all if MBS had anything to say about it.  Even Treasuries were fairly close to 'unchanged' to start the domestic session and were almost able to regain those levels after a few early hours of weakness.  

Heading into the PM hours, however, Treasuries were locked in a fairly linear and generally gentle trend toward higher yields.  For most of the day (but especially in the AM hours), MBS were more than willing to outperform Treasuries with the latter being only modestly weaker and mostly sideways (fertile ground for MBS outperformance!).  As the selling shifted gears from "almost imperceptible" to something a bit more threatening, MBS stopped trying so hard and joined Treasuries in their slide toward negative territory.

By the end of the day, 10yr yields were up just over 3bps while Fannie 3.0 MBS held losses to 3 ticks (0.09).  Tomorrow brings the start of the Treasury auction cycle and the 2nd tier inflation data (Producer Prices).  These aren't necessarily extreme market movers, but the auction cycle could be one of the culprits driving a general reluctance among bond buyers at the start of the week.