Up until this morning's Durable Goods data, bonds looked ready to go either way.  MBS and Treasuries were slightly weaker, somewhere around halfway back to yesterday's weakest levels.  An exceptionally strong showing in the econ data may well have resulted in a test of those weak points.  Instead, the data was fairly poor overall. Cars, Planes, and defense spending buoyed the headline, but by the time those volatile, big-ticket items were factored out, the business spending outlook was not so hot.  In addition, last month's numbers were revised significantly lower.

Bonds rallied as a result.  The trading that occurred overnight, leading up to the report ends up looking like a temporary departure from a 2-day trend that stayed positive for bonds through the noon hour today.  It's not uncommon for the tone in the bond market to change significantly on Friday afternoons, both due to Europe winding down for the day and the approaching weekend affecting participation among domestic traders.

With that in mind, it doesn't make much sense to read into the afternoon trading activity.  What's important is that we're well within April's range heading into Fed week (and the first look at Q1 GDP).  Without any significant data until then, it seems like we'll make it all the way until Wednesday before having a chance at a meaningful break outside the range.