Why Bonds Sold Off So Severely Today

The only number higher than the amount of bonds sold today is the number of people rushing to judgment about "WHY." It wasn't a diesel export ban (or lack thereof), higher oil prices, or the 5yr Treasury auction (see today's recap video if need proof).  

The initial pop at 9:45am was entirely driven by S&P PMI data. A majority of the selling since then has occurred in stunningly linear fashion without any "event risk" volume spikes. It has also largely tracked with stock losses. This is exactly what it looks like when a big outlier in econ data hits a nervous market that's on the edge of its seat waiting for data to speak to a recent shake up in the Fed rate hike outlook. To be clear, we're not saying 10yr yields are 15bps higher because of an S&P PMI report. Rather, it was a catalyst for a technical breakout and repricing of risks surrounding next week's more important economic data. Bottom line, if today's PMI saying anything about next week's PMIs (and jobs report), it's safer to sell now and cover later if today's data proves to have been a false alarm.