Bond markets began the day in slightly weaker territory, with Treasuries following European yields higher in the overnight session.  Domestic hours brought more selling pressure out of the gate with Q1 wage growth coming in higher than expected.  

There were also some counterpoints in the GDP data that made the 0.7 vs 1.2 result look more palatable.  Namely, inventories cut 0.9% from the GDP headline.  That means GDP would have come in at 1.6 vs 1.2 with a neutral inventory build.

Finally, the PCE and core PCE components of the GDP report were downright unfriendly to bonds.  PCE was up 2.4% vs 2.0% previously and core PCE came in at 2.0% vs 1.3% previously.  Those are pretty massive swings in inflation metrics--certainly enough to convince a few traders of a faster Fed rate hike timeline.  

Perhaps more than a few traders were convinced to sell on the news as 10yr yields shot up to 2.338.  The selling pressure was short-lived, however, with European yields refusing to take part in any further move above the overnight high yields.  When stocks opened, rates continued lower, driven by ETF trading and month-end asset allocation trades (moving money between stocks and bonds to meet portfolio requirements).

Heading into the end of the day, month-end bond buyers kept Treasuries well-sponsored and MBS were happy to come along for the ride.  10yr yields ended up ducking back into positive territory right at the 3pm CME close.  Gains persisted through the hard close at 5pm.  Fannie 3.5s ended the day 2 ticks higher at 102-26.

(For what it's worth, I received several questions today about North Korea testing a missile and the possible bond market connections, but there really wasn't any meaningful movement when the headlines came out.  Yen/$ reacted in a somewhat noticeable way, but the afternoon's most obvious move for Treasuries was singularly associated with month-end, heading into 3pm).