Bond market movement over the past few days certainly isn't ALL about the VW news, but I've reluctantly come to accept just how much of a role it played.  It's not that bond traders are sitting around waiting to find out what happens with VW per se.  Rather, VW caused or added to the generalized anxiety in equities markets, which in turn helped reinforce some bond market optimism.

The optimism had its own reasons in addition to equities weakness.  Today saw far fewer corporate bond deals, which had been a big issues so far this week.  Add to that the fact that Treasury auctions were done this afternoon and much of the previously troublesome "supply" considerations were out of the way for bonds. 

The curveball came later in the afternoon.  After earlier news that BMW may have engaged in some of the same emissions drama as VW, stocks were having another very bad day.  Then the paper that published the story retracted it!  Stocks came roaring back and took a dent out of the bond market gains in the process.

The next curveball is still in the air, and I'm sure we'll discuss it tomorrow depending on the market reaction.  Yellen's speech came out right at 5pm, and was so insanely different from last Thursday's communications that it really just doesn't make sense.  The gist was that everything is fine and she expects a hike in 2015.  Definitely not the same Yellen as last week.  Markets were closed by then though, with bonds just barely holding in positive territory.