Today's trading has offered an interesting development or two.  The first was the reaction to the Durable Goods data.  It was significantly weaker than expected at  -1.4 vs a +0.4 forecast.  While this report is historically volatile, we still would have expected at least a modest improvement in bond markets.  But within minutes of the report, trading levels were back to opening levels or weaker. 

That was the first ominous cue of the day, and fact that bonds erred on the side of weakness (relative to the data) is especially notable considering the opposite was the case over the past two days.

The next interesting development was a more determined sell-off (albeit a small one)heading into the 10am hour.  European bond market weakness was even more pronounced during the selling.  Other factors included profit-taking from the recent rally, an uptick in corporate bond issuance, and the fairly normal level of concessionary selling that tends to precede the bigger Treasury auctions.    The 5yr auction is coming up at at 1pm and is the next scheduled potential market mover.