After starting the day just slightly stronger, and with absolutely nothing by way of major market-moving considerations, Fannie 3.5s moved up over half a point today (at times, more than .625) to 103-08.  They were about a point lower yesterday morning.  So how'd THAT happen?

This was mostly covered in the Mid-Day: Bonds End 2 Weeks of Consolidation... With a Massive Rally.

As unsatisfying as it is, there's no big, secret, driving force behind today's move.  European markets certainly didn't lead Treasuries lower this time around, although the fact that core European debt reversed last week's selling pressure during the first two days of this week probably helped.  At least we could say that Europe didn't get in the way.

Beyond that, and already mentioned in the link above, there was some early month-end buying among money-managers who are forced to buy a certain amount of bonds by the end of the month in order to match portfolios to various indices.  From there, all it really takes to get today's sort of rally is for 2.47% in 10yr yields to come under sufficient pressure. 

2.49% served as the opening act, with buying picking up quickly beofre a brief pause as 2.47.  Once 2.47 was broken, snowball buying is more than enough to explain the rest of the run down to 2.445.  Lower-than-average volume greased the skids for big trades to have larger-than-average effects.  Given the surprises seen at the last reading of GDP, traders would rather get their bond-buying done before this one comes out, and simply sell-off accordingly if it's stronger than expected.  That's much easier and less costly than having to chase a rate rally after beginning the day betting on rates that quickly proved to be too high.