Today was mostly about North Korean de-escalation, and somewhat about stronger economic data.  If you haven't heard 43 times already, North Korea graciously decided to hold off on their little plan to nuke Guam (though the little plan of marching up and down the square remains intact for now).  Considering that nuking Guam (or more likely, "attempting" to nuke Guam) would have led to Nuclear war or something equally unpleasant, bond markets had some gains to give back.  Reason being: bonds benefited from "flight-to-safety" demand as investors shed risk amid last week's nuclear uncertainties.

All of the above being the case, most of the day's bond losses were seen in the overnight session (the initial headlines about Guam came out last yesterday).  The morning's economic data didn't help.  Retail Sales came out stronger than expected.  In fact, every report was at least as good as median forecasts, but it was Retail Sales that naturally garnered the most attention.

Tomorrow brings the Minutes from the most recent FOMC meeting.  It's a chance to get a deeper look at the conversation that underlied the rather boring Fed Announcement from July.  That said, major Fed communications always reserve the right to move markets, and that's especially true when major policy changes are expected in the near-term future.  

Fannie 3.5s lost 6/32nds , but because the losses were intact at the open, there wasn't much reprice risk throughout the day.  10yr yields ended the day 4+bps higher at 2.266, reinforcing a bigger-picture bounce at the 2.21-2.22 technical level.  If yields proceed to break over 2.28, it would be an even stronger vote in favor of momentum toward higher rates.  Ultimately, we'd need to see the reaction to next week's Jackson Hole symposium before expecting any truly big breaks outside recent ranges.