If there were a magical ratio comparing the overall movement in bond markets to the relevance of the factors motivating the movement, it would be off the charts with today's rally.  A 4.72bp improvement in 10yr yields is nothing to shake a stick at--especially when it resulted in the best closing levels in nearly 2 months.  But this particular rally is utterly lacking in a few key ingredients we normally like to see when bonds are green.

First and foremost, there's just not any volume or liquidity to speak of at the moment.  That's not altogether uncommon for this time of year, but it stands out a bit more when it's the caveat to an otherwise "nice" move.  Before we go any deeper into that rabbit hole let's cut it short with an example to drive home the point.  

Imagine that bond traders made bets on rates moving higher last week and then got out of the market this week.  "Getting out of" a "bet on rates moving higher" = buying bonds.  I'm not saying that's the only driving force behind today's rally, but in illiquid markets, it wouldn't take very much of this short-covering to give the illusion of a healthy rally.  And still, it would merely mean traders had moved to the sidelines ahead of Jackson Hole. 

Bottom line, there's a distinct apathy underlying today's solid gains.  I'm not even sure if the Jackson Hole symposium over the next 2 days is what bond markets are looking for, but it's our best shot at underlying events moving bonds this week, as opposed to the random walk seen over the past 3 days.