A slew of PMI reports (Purchasing Manager Indices, which are essentially more granular, more timely, and only slightly more focused versions of GDP) sparked a massive rally in European bonds overnight. That spilled over to US bonds but without extreme effect. Things improved after domestic PMI data made similar suggestions (slower growth and less inflation), with bonds at their best levels since before the last fateful CPI report (the one that sparked last week’s drama).
Barring another CPI-like surprise, recent data and market movement confirm we’ve seen a ceiling in rates (i.e. when 10yr yields topped out at 3.50% last week. Since then, they’ve broken June’s uptrend and taken out key technical levels at 3.31, 3.19, 3.13, and now this morning, 3.07.