Despite a solid day of volume and fairly noticeable mid-day bout of weakness, not much truly "happened" for bond markets today.  There was plenty of reason to suspect that the Philly Fed data would come in weaker than expected (why forecasters didn't see those reasons is beyond us), but when it did just that, both stocks and bonds seemed to pause, look at each other, and ask "which way do we go?"

The 6-month outlook component came in about as strong as the rest of the report was weak.  That potentially helped confuse markets at least decide that they didn't need to embark on a flight-to-safety in the face of rotten economic data.  With that decision made, the only other directional options were sideways and higher for stocks/bond yields.  They did a bit of both by the end of the day. 

At present, 10yr yields are only 2bps higher than yesterday and MBS only 3-4 ticks lower in price.  In other words, we continue to NOT be dealing with big, decisive movements.  Sadly, we continue to not be sure where the motivation for the next one will come from.  Right now, it's as good an explanation as any to say bond markets are trending slightly weaker so far in February by way of correction to a much stronger trend in January.