Just like bond markets were struggling after Bernanke's testimony yesterday, but not directly because of the testimony, so too are they struggling today after ISM data.  It's not that the data was especially great and is directly causing bonds to suffer.  Rather, we're dealing with the twofold factor of Stock Market strength combined with normal ebbs and flows of an uncertain market.  You'll hear me reference "ebbs and flows" more often these days, and really, it's just another way of saying "the trend is your friend," or "play the range until the range plays you."  Here's what I mean...

Notice that yesterday and Monday, we were in the process of bouncing at the most aggressive (lower line) end of the trend channel.  Today we're "testing" the mid point.  It also coincides with a horizontal pivot point at 1.90 so it could hold up--at least it's been doing a decent job of trying to hold up for now.  But even if it breaks, we'd still be in the broader trend channel.  And it's a similar story in MBS, although due to recent spread weakness, MBS are nearer the limits of their channel (maybe this is part of the reason MBS are outperforming more convincingly today?):

Bottom line on MBS and TSYs is that NEITHER of the above two charts look dire.  Sure... they could change to look dire at some point, but the fact is that we're not there yet.  The market that IS actually at risk for a shift in trend is stocks.  Unless they forge some serious gains today, they look like they could be in the process of confirming a break lower.  To wit, I offer the following chart for your consideration:

Decide for yourself, but it definitely looks like something is in the process of being decided right about now...  Maybe NFP day after tomorrow will help confirm or reject?  Sometimes seems like these things line up almost too coincidentally, no?

Finally, as a bit of an aside, here's a look at how equivocal the ISM Non-Manu data was this morning.  Employment component looks ugly.  Markets should pay attention to that re: Friday, but maybe they're hoping you'll forget about the 45k Verizon workers coming back into the numbers.  Then there's the business activity component which looks rather bullish.  The point is that there are multiple interpretations and it's not a market mover in and of itself.  All about the stock lever and ebbs and flows...