Bonds were weaker in the overnight session, without any new or interesting developments to blame.  The past 6 days have been a steady 'unwinding' of the Italian drama rally.  That's old news at this point.  Overnight weakness was just another logical step in the bond market's return to pre-Italy levels.

The combination of 10yr yields very near 3% and yield curve levels (the gap between 10 and 2yr yields) that were nearly 7bps off recent lows prompted a corrective shift out of shorter-dated Treasuries and into 10s/30s.  Some traders/analysts are chalking this up to psychological support at 3% while others see it as the product of a ceiling in the yield curve.

Specifically, the 2s/10s curve has fallen toward 40bps several times recently.  Over the past 2 months, attempts to bounce have run into overhead support around 47bps.  And that's where today's bounce happened.  Granted, it probably didn't hurt that it coincided with 10yr yields near 3%.  

10yr yields are currently down less than 1bp on the day at 2.964 and Fannie 4.0 MBS are up a mere tick (1/32 or 0.03) at 101-20 (101.625).