Bonds have had a good thing going so far in 2019.  Various geopolitical uncertainties combined with the prospect of downbeat economic growth in Q1 and a generally dovish Federal Reserve to keep rates near recent lows.  All this in spite of a somewhat substantial bounce back in the stock market.

By the end of last week, we were seeing our first major cause for concern in more than a month as rate benchmarks at home and abroad looked like they had bottomed out and were potentially bouncing higher.  But the current week is quickly making that move look like a head fake with this morning's ECB reaction being the most compelling counterargument yet.

As you might expect from a rally based on European news, European bonds are benefiting more than Treasuries.  German 10yr yields (the EU 10yr benchmark) are already back to the levels that looked like 2019's floor just a few days ago.

US yields would be hard-pressed to return to their own February lows today, let alone the 2019 lows seen in early January.  Still, the extent to which Treasuries have been willing to follow Europe is notable and positive (because Europe is very downbeat on its own growth/inflation prospects this year).

Questions remain as to how much of the early 2019 bond market strength can be traced to anticipation of downbeat outlooks or geopolitical uncertainty.  In other words, how well was the early March landscape priced-in during Jan/Feb?  Today's European bond rally suggests it was priced-in fairly accurately, but it will be important to watch for a break of 2019 lows (only a few bps away right now).