Heading into today, the afternoon's FOMC Announcement had the first right of refusal when it came to moving markets.  As it happened, it was the morning hours that ended up setting the tone for the entire day, and by a wide margin at that.  In fact, the FOMC Announcement ended up being swallowed up by the mere remnants of tradeflow momentum from European hours.  What happened here?

First of all, be sure to see that MBS are only down 2 ticks on the day.  Treasuries are worse off and have given an increasingly negative technical signal, but as far as today is concerned, MBS ended up taking minimal damage.  Even Treasuries held their own when compared to German Bunds.  And with that, we finally get to the heart of the movement.

Keep in mind that Germany IS the "European bond market."  10yr German Bunds are the benchmark for the Eurozone because they trade in the highest volume and are in the most abundant circulation.  If you go into an imaginary bond store and ask for a 10yr European government bond, you'll be handed a 10yr Bund.  With that out of the way, Bunds tanked today, utterly.  They'd been sort of toying with the notion of putting in a big-picture bounce off resistance that's been in place since mid-April and today was the day they really confirmed a move in the other direction.

Treasuries took some direction from this in the overnight session, but with GDP on the horizon, and after selling off quite a bit on their own in the previous session, were able to hold their ground fairly well.  After GDP came out, it looked for a brief moment like that ground-holding was the right idea, but by 9am, they were swept up in a full-scale snowball sell-off.    This is frustrating to watch because there's no layperson explanation for the weakness.  It had nothing to do with GDP.  GDP was a speedbump for something that was already in motion.  It ran it's course by 9:10am Eastern and that was the end of the day--really.

Yields never went higher than that and never went lower than opening levels.  9:10am hit and bond markets drifted sideways in the bigger picture.  The next biggest event in terms of sustained volume was at 1pm, which marked the end of the week's auction cycle and perhaps more importantly, the European close.  In the chart below, the purple bars are volume and the gray line is 10yr yields.  Notice that everything important happened in the morning.  GDP was a speedbump.  9am didn't coincide with anything but tradeflow shifts (hence the "???"), and the FOMC Announcement merely brought volume with no movement behind it.