It was a tale of two market movers today as afternoon Fed comments completely reversed an earlier reaction to super strong economic data.  The Philly Fed survey blew expectations out of the water and handily crushed last month's numbers across the board.  Given that the market holds this report in higher-than-average regard, it was no surprise to see bonds losing ground right after it came out.

But bonds didn't lose as much ground as it seemed like they should, based on the size of the beat.  Part of the reason is that in the context of 2 months worth of Philly Fed data, this month's report looks a lot like the last massive beat in March.  Both followed exceptionally weak readings in the previous month (Feb and June respectively).  I'm not sure why economists didn't update their forecasts accordingly, but I'm betting they will be a bit more optimistic next time they see a big, isolated drop in the data.

All that having been said, bonds were indeed weaker after Philly Fed and they weren't exactly charging hard back to stronger territory.  That feat required incredibly dovish comments from Fed's Williams (see below) just after 2pm.  Bonds gained ground nicely after that with both MBS and 10yr yields making back into positive territory on the day.  Most lenders repriced for the better by the close of business.