Bonds are quickly finding themselves on the back foot after a few headlines regarding the selection of an alternate finance minister candidate for the would-be Italian government.  If that happens, the country avoids elections and is thus less likely to be forced onto a path toward an EU departure. 

ECONOMICS PROFESSOR GIOVANNI TRIA IS BEING CONSIDERED AS A POSSIBLE ECONOMY MINISTER IN COALITION GOVT - 5-STAR SOURCE

ITALY'S 5-STAR, LEAGUE CHIEFS HOPE TO REACH GOVT AGREEMENT THURSDAY OR FRIDAY - 5-STAR SOURCE

ITALY'S 5-STAR, LEAGUE CHIEFS ARE MEETING, HAVE STILL NOT FOUND A SUBSTITUTE FOR SAVONA AS ECONOMY MINISTER - 5-STAR SOURCE

All of the above is bad for bonds (because an Italian departure of the EU is good for bonds due to safe haven demand).

10s are up into negative territory and Fannie 4.0 MBS are down a quick eighth of a point to 102-03 (102.09).  This is just over an eighth of a point lower from many lenders' rate sheet print times.  Early/aggressive lenders could already be considering negative reprices, but the average lender would need to see a bit more weakness.