Today was destined to be a sideways grind at slightly weaker levels for bond markets.  This would have extended the theme that had been in place since Wednesday's FOMC events.  The weakness probably wouldn't have erased Wednesday's gains.  The bigger-picture rally wouldn't have even come close to being challenged, and we'd just be slightly more anxious heading into next week.

Instead, this morning's residential construction data was weak enough to make a dent in markets (a positive dent for bonds).  Housing Starts fell 5.5 percent to 1.092m vs a median forecast of 1.215m.  Building permits fell 3.9 percent to 1.168 vs a median forecast of 1.250m.  Bonds responded immediately--turning positive on the day and rallying through the European close at noon Eastern.  From there, we drifted sideways in slightly stronger territory.

Bottom line, the willingness to respond to econ data and to rally into positive territory goes a long way toward ruling out bigger risks of bigger post-Fed bounces.  We were already mostly able to do that with yesterday's flat performance, but a 2nd day of "ground-holding or better" is always nice.