Stocks moved higher today and bond yields did the same. Given that coronavirus has been the key consideration for both sides of the market, the movement is a bit counter-intuitive considering the virus continues to spread exponentially. Nevertheless, there are a few potential explanations.
The disease outlook could actually be improving (relative to expectations). A certain amount of deterioration in the viral outlook is assumed to have already been built into the trading response. Markets have seen viral outbreaks before and thus have a curve by which to measure this one. If it's falling short of that curve, markets can ease up a bit. Some experts are already predicting the exponential phase to crest within 1 week. If numbers keep that hope alive, bonds could indeed continue to weaken.
Some comments from China's President Xi may have offered some reassurance about the country's willingness to combat the virus (and accept outside help in doing so).
Away from the headline news, there was a lot of bond market supply today. The last of the week's big Treasury auctions wrapped up early in the afternoon, but there are also a good amount of corporate bonds hitting the market.
And finally, with complete disregard for today's events, traders could simply be taking this opportunity to push for a bit of a technical correction to the past 2 days of more significant movement. On a tangential note, they could also simply be circling the wagons (i.e. stopping what they were doing in order to prepare for the next thing they're going to do) ahead of tomorrow's Fed Announcement.
Either way, it's a dangerous day considering the virus-related news has been the definitive motivation for a good amount of bond market strength these past few trading sessions. If the hopeful momentum continues tomorrow, weakness could escalate in a much sharper way.