Bond markets had a reasonably calm overnight session.  Treasuries didn't respond in any major way to slightly bigger moves in European markets and stock futures before the domestic open.  Heading into the 8am though, it was clear that early domestic traders had a modest amount of selling to do.  This brought 10yr yields from 2.27 to 2.29 between 7:30 and 8:30am.

Housing Starts data was slightly stronger than expected at 8:30am, coming in at 1.173 million vs 1.135 million (annual pace).  Permits came in at 1.289 million vs 1.15 million.  Bond markets sold off ever-so-slightly at first, but have since eased back toward unchanged levels.  We are perhaps getting some help from a bounce lower in oil prices that corresponds with the high yields in Treasuries (or low prices in MBS).

The 9:15am Industrial Production data passed without a trace, despite coming in much weaker than expected (-0.6 vs -0.1 forecast).  Some of the drop can be explained away by the decrease in capacity utilization (77.0 vs 77.5 previously).

10yr yields are currently just 1bp higher on the day at 2.28 and Fannie 3.5 MBS are down only 1 tick at 102-30.