Overnight and early domestic Treasury trading volumes have been larger than normal as bond traders make up for the 1.5 days holiday hiatus.  10yr yields rose moderately at the start of the European trading session, moving up from 2.33 to 2.35 approximately, but found and held support at 2.355 for the rest of the overnight session.

Heading into domestic hours, bonds recovered somewhat, but never made it back to the best levels from the overnight session.  The 8:20am CME open has proven to be unfriendly so far, essentially taking us back in line with the weaker levels (10yr yields currently at 2.35% and Fannie 3.5 MBS down 1/32nd after being up as much as 3/32nds).

If we happen to break higher in yields, it would put us in the weakest territory in well over a month and essentially cast a vote for a continuation of the broader selling trend.  If that happens, the pace of the weakness can still tell us a lot about underlying mentality heading into tomorrow's data.  Specifically, modest losses without any linear trend higher in yields would suggest traders are at least willing to entertain the notion of buying bonds again in the event of weaker data.