• European stock weakness/bond strength ruled the day
• Treasuries, stocks, oil, all followed Europe until Europe closed, then went their own ways
• German Bunds on brink of all-time lows
• Domestic stocks still stuck in long-term reversal pattern
• Oil still well under $40
• All roads lead to bonds

The sun never sets on the bond market empire.  If it's not oil prices, stocks, or Fed policy helping Treasuries and MBS, it's European market panic and ECB meeting minutes.  Everywhere we look, we can find another reason for bonds to be doing well, and bond traders definitely agree.

The overnight session began with a strong move in currencies that put domestic markets on the defensive.  In fact, the Yen is in the midst of a wholesale reversal of its late 2014 spike (where "spike" = weakness) as the Bank of Japan is seen as having reached at least a temporary limit in its ability to weaken the currency.

The "risk-off" flames were fueled by European bank stock weakness later in the overnight session, which was complimented by European bond market strength.  All of the above spilled over to Treasuries as investors sought safe havens for cash.  10yr yields and MBS began the domestic session near yesterday's best levels and never looked back.  Stocks fell early and often, doing much to contribute to the bigger "risk-off" trading theme.

Stocks fell early and often, doing much to contribute to the bigger "risk-off" trading theme.  In fact, S&P's completely erased yesterday's strong move, forming one of the few candlestick patterns worth talking about (bearish engulfing pattern).  The fact that this is occurring right at a time where it already looks like stocks were fizzling, AND right when corporations enter a blackout period on corporate buybacks, AND right at the beginning of earnings season, AND right as central banks are reminding us that they're still pretty darn concerned about the fragility of the global economy... well, it's not good for stocks and it's very good for bonds.