On a scale of 1-10, with 10 being the best case scenario for bond markets, today was 6.  It probably stood very little chance to be much more than a 7 or an 8, but a very real chance to be a 2-3.

In other words, we dodged a bullet, but remain under fire.  Retail Sales was quite a bit weaker than expected--notably affecting many firms' running estimates of GDP--and Jobless Claims offered no counterpoint, yet bond markets only managed modest improvements.  Rates, for instance, didn't even make it back to Tuesday's levels.  As far as consolation prizes go, it's better than a sharp stick in the eye, but in and of itself, isn't something we're likely to cherish for years to come.

One counterpoint that makes things a bit less gloomy is the fact that the rally commenced despite another big day of gains in equities.  While the stock lever has disconnected quite a bit, that could still be worth something.  Additionally, rates held their ground ahead of the 30yr bond auction where 3.70 (30yr Treasury yield) was prodded several times.

While the auctions were solid, who knows how solid they would have been without all the weakness that's been built in this week?  If by yesterday we were growing to accept the reversal of January's trend toward lower rates, nothing about today changes that.  At stake was the formation of the next trend (i.e. would we now reverse quickly higher in rates, gradually weaker, or muddle sideways), and today's trading simply delays that process.  With serious weather problems mounting in New York, tomorrow might not be any more illuminating.