J-Hole Knee-Jerk: A brief, but volatile market reaction to Fed Chair Yellen's speech at the Jackson Hole symposium.

That's been the day's primary story, at least on the surface.  Bigger media outlets will attribute the volatility to Yellen's speech and headlines out of Ukraine.  That's OK.  They don't know any better, but you can.

The truth is the same as it has been: domestic bond markets really aren't sure what the game plan is. Big conviction has been punished so volatility stays low as a result.  Markets are resigned to follow European undercurrents and intraday momentum when big trades happen.  Today's European undercurrents are about as obvious as usual (i.e. wet German blanket dragging US down, and remember, in bond market terms, Germany = EU):

On the topic of big trades motivating momentum, here's how pathetic the post-J-hole trading really was.  It wasn't the market's reaction to Yellen that inspired the biggest move of the day.  In fact,t he post-Yellen trade was mostly volatile, and very much in line with the preexisting trend.  The bigger move--both in terms of volume and volatility--was driven by ONE trade.  You read that right: just one big block trade (what's a block trade?) was all it took to get the entire herd running in the same direction as the trade.

For what it's worth, during these slower summer months, it's not all that uncommon to see bigger block trades setting the tone for trading to a greater extent that fundamental economic data.  In the current case, it was good for a short term 'pop,' but no match for the European wet blanket.