The overnight session began with bond markets moving into weaker territory against the backdrop of a recovery in equities.  There was clearly a lot of month-end buying yesterday, so it was fair to wonder if the sponsorship would wane today.  In other words, certain investors are forced to buy a certain amount of bonds heading into the end of the month.  They can do this any time before the end of the month, but usually have to make adjustments in the last few days in any event.  Yesterday's trading patterns suggested that month-end buying was prevalent, so there was some cause for concern that today wouldn't be as resilient by comparison.

If you happened to have been up all night watching Treasury yields rise, that concern was all the more logical.  Fortunately, month-end buyers were lined up at the domestic open.  European bond markets were already bouncing in a positive direction by then--a fact that didn't hurt our own ability to recover.  10yr yields moved from highs of 2.104 to 2.06 currently, helping them break even on the day.  MBS are in just slightly positive territory to boot.  Given that yesterday was the best close in more than a month, holding ground here amid rising stock prices is a victory.

Keep an eye out for volatility in about an hour when Yellen speaks and again about an hour after that at the official bond market close (3pm).  This time of day is much more active on month/quarter-end days.