S&P futures were well-connected with overnight Treasury trading as global weakness set the tone early.  Chinese stocks are back in the news with another massive drop to kick off the week's trading.  The Chinese government announced more stock buying late this morning, but it's had little effect on the general malaise in broader markets.

Treasury yields were in better shape even before this morning's Durable Goods release, but improved afterward.  That's a bit counter-intuitive considering the report came out stronger than expected (3.4 vs 3.0).  Possible explanations for the paradox include the fact that several internal components were weaker or that traders were simply  wanting to see a better bounce back from recent weakness.

Explaining the reaction to Durable Goods is neither here nor there at the moment considering Treasuries and MBS are both back to 8:30am levels.  We'd want to see this 2.24% ceiling hold in 10yr yields in order to keep negative momentum in check.  The analogous level in Fannie 3.5s is 103-13.  Breaking below would introduce negative reprice risk for some lenders.