Weaker earnings from a few notable names, including First Republic Bank...  Weaker economic outlooks at home and abroad... Debt ceiling trepidation...  Or a simple range-bound range trade...  Any and all of the above can claim some credit for keeping the friendly momentum intact for bonds.  Today's rally is bigger than yesterday's so far with yields already challenging the first of several lower range boundaries at 3.40.

The KRE regional bank index has been generally correlated with bond yields, and while it's not quite as low as it was in March, it's been losing ground heading into and out of FRC earnings.  EU bonds are acquiescing to the broader reversal and that's adding to the positive momentum (notice the yellow line leading the red line lower over the past week).

The following chart shows the temporary bond market distortions created by the debt ceiling drama.  We've been around this block so many times, but the market still takes some precautions.  In other words, Treasury holders have shifted into the securities that are the most guaranteed to be repaid (i.e. the ones that are repaid before the debt ceiling would need to be raised).