Although it's true that bond markets moved into weaker territory after this morning's data, it's even more true that the weakness looks like a mere continuation of yesterday's.  In other words, this move began just after 10am yesterday when Fannie 3.5s made it within 1 tick of 103-00 and 10yr yields dipped briefly into the 2.47's. 

Stronger Housing Starts data contributed to the move, but given the counterpoints (super high multi-family component and not much growth in single-fam), markets would have been within their right to trade in the other direction if they were so inclined.  The missing ingredient for trading in the other direction was the absence of another European bond market rally.   In a general sense, markets agreed that the super-aggressive rally would take a break today.  We didn't really see enough of a move in the other direction to conclude that a big bounce is about to happen, but perhaps just enough to be worried about next week.