"Move along...  Nothing to see here..."  Despite the 4.6 bp increase in 10yr yields and the quarter point drop in MBS Prices, today was actually rather uneventful.  We already know that bond markets seem to have run out of steam after reaching recent low yields on the 14th.  All that remained to be seen was where the other side of the consolidation would kick in. 

Unfortunately, we're still trying to find the short term ceiling in yields as today saw another move toward higher highs and higher lows (each of the past 3 sessions have seen "higher lows").  The intraday highs of 2.079 mean that the consolidation has taken a bit of a weaker tone than that seen during the past several sessions.  It's too soon, however, to know if that means anything than that was how the ball bounced today.

There's certainly a temptation to chalk up any day's bond market weakness to stronger economic data if it's present.  It is present today (Housing Starts +1.206 million vs 1.15 million forecast), but indeed the temptation should be avoided.  Most of the day's weakness was intact before the data and the closing levels were not at all far from the pre-data levels.  This looks like more of a consolidation move ahead of next week's FOMC, with perhaps a nominal push from the data and a moderate slate of corporate bond issuance.