We ended yesterday with a glimmer of hope for an end to the recent uptrend in rates.  Even so, the modest gains were scarcely enough to defeat that trend.  We knew we'd need to see a bigger commitment among bond buyers before getting our hopes up.

Not only did we not see such a commitment, we saw the relative opposite.  Whereas we were looking toward domestic economic data for input on current trading levels, inspiration instead came from European bond auctions of all the crazy things!  

An exceptionally weak French bond auction was the scene of the biggest bout of selling pressure overnight.  The response took German Bunds (the 10yr benchmark for the EU) above its highs of the year.  Breaking that technical ceiling resulted in a domino effect of selling pressure that spilled over into US bond markets, easily outweighing today's other considerations.

By the time the ECB's meeting minutes came out a few hours later, they merely confirmed what markets have been trading since June 27th.  The ECB is getting closer and closer to reducing its asset purchases--taper tantrum style.  

Weaker ADP Employment data had no effect on the sell-off.  Stronger ISM Services data meant there were no more big surprises on the econ calendar to halt the slide in bond markets.  

The only relief was for European markets to close.  With that out of the way, US bond markets were finally able to make some progress back toward the morning's best levels, but nearly 4bps of weakness remained in terms of 10yr yields by the 3pm CME close.  MBS fared a bit better, losing only 6/32nds in price as of 3pm.