Recent trading activity lies in stark contrast to the drama seen earlier in 2020.  Even at the beginning of June, bonds still had an interesting (and scary, at first) story to tell as yields spiked in response to stronger econ data and coronavirus hopes.  Both of those factors remain in play, yet bonds are now back near their best post-covid levels and trading in one of the narrowest ranges ever.  What changed?

First off, the current coronavirus hopes are different than those in early June.  This time around, the hope was only made possible after several states saw exploding case counts in response to decreased social distancing.  In other words, things only look good because of how bad they got.  Nevertheless, I would still argue that the leveling-off of hospitalizations in several of the hotbed states is just as encouraging of a corner to turn as that seen in early June.  

Economic data improvements are easier to see, and also easier to explain away.  Econ data would be scarier for the bond market if it was clear that more of the workforce would end up going back to work (whenever we can figure out how to safely accomplish that).  Moreover, the lesson from early June is that the econ data can quickly be rendered obsolete by a resurgence of covid, so covid gets the primary attention.  Last but not least, the Fed never misses a chance to reiterate its bottomless well of bond buying power.  More than anything, the Fed is the reason that both stocks and bonds have been able to improve and diverge as much as they have, post-covid.

There's nothing to do right now but hurry up and wait.  We'll know something is changing when bond yields are actually breaking up and out of their various sideway/narrow ranges.  Until then, invincibility!