More Help From Stocks, But More Reluctance From Bonds

Up until just after 3pm ET, the stock market was on pace for its worst day of the recent selling spree in terms of day-over-day losses, but a rebound looks to be underway in the final hour of the NYSE session. The swan dive gave us another opportunity to observe the stock/bond dynamic whereby the correlation starts to increase when stocks are making bigger moves. In general though, it's taken more and more convincing for bonds to even begin to move back toward recent lows. Case in point, 10yr yields stayed well clear of last week's better levels and they weren't even willing to break the AM lows despite the 3pm swan dive in stocks. A combination of upcoming Treasury auctions and important econ data (Wednesday's CPI) is a good enough justification, but even last week, we were already talking about the bond rally being a bit overbought from a momentum standpoint.