Bigger-picture trading themes are still driving the bond market movement this week.  Namely, bonds had been eager to consolidate more than a month of improvements, but had held off until yesterday due to panicked selling in global risk markets (stocks, certain commodities, and currencies).  In other words, yields had been "pulled lower against their will."

With domestic equities markets continuing to hold Monday's weakest levels as a floor and Chinese equities now potentially holding yesterday's lows, bonds' will is being done.  The selling was exacerbated this morning by stronger than expected Durable Goods data.  Still, strong data on any given day is a short term development in a longer term saga--a brush-stroke against the backdrop of a bigger picture.

Later in the morning, New York Fed President Dudley commented that a September rate hike was now less compelling in light of recent events.  Bonds rallied fairly sharply, but sellers were waiting at 2.096, the same level that served as a floor heading into yesterday afternoon.

That leaves us to watch a fairly wide range of potential ceilings at 2.13-2.15.  It looks like that's holding for now, despite intraday highs of 2.168.  Getting past 2.096 would suggest an end to the  2-day correction (today's intraday spike after Dudley confirms a sort of 'wall' of trading positions there).  The next relevant calendar event is the 5yr auction at 1pm.