Yesterday's morning headline asked if the recent move was weak enough that we should expect a bounce or so weak that it suggested further selling.  Interestingly enough, we saw both sides of that coin yesterday as bond markets continued to sell-off aggressively during the morning only to rally back to unchanged levels in the afternoon.  There are a few caveats though.

The first caveat is that yesterday was the last day of the month.  As such, it benefited from month-end tradeflows, and those clearly played a big role this time around.  We have to wonder whether or not we would have seen such a heroic push back if not for the month-end factor.

To add caveat-based insult to caveat-based injury, we can also simply observe that the afternoon rally clearly hit a wall before breaking the morning's best levels or yesterday afternoon's. 

The conclusion is that we really need to see how bonds trade today.  It would be especially telling if the momentum goes against the grain of the data.  ISM Manufacturing is one of the few reports that's occasionally in the same league as NFP in terms of market movement potential.  If ISM is weak, and bonds sell-off anyway, game over.  If ISM is strong and bonds hold ground or improve, there is hope.  Failing that, the falling knife is not yet looking easy to catch (or "rising knife" in the case of Treasury yields).