After yesterday's modest bond market weakness, we may well have assumed that traders were in their preferred positions ahead of Thursday's big-ticket events and that we'd be left with a typical sideways grind in the meantime.  Perhaps that would have been the case if not for the overnight trading hours which saw a sharp risk-off trade in Japan right at the open.

 Yen (a good indicator for the risk-on/off trade) had been holding above a key technical level at 100.24, which was instantly broken at the open.  Yen subsequently moved to the lowest levels (stronger) in more than a month as Japanese stocks fell.  US Treasuries soaked up a fair amount of the safe-haven demand, putting them in line with the last week's best levels just before the open.

Up until that point, attribution of the rally to events and news had been debatable.  A terrorist incident in Australia got the earliest credit, but was joined by "Middle East tensions" generalities shortly thereafter.  At 7:30am, however, an article discussing China's shift back into being a net-buyer of US Treasuries clearly caught the market's attention.  

This was more a case of something that SOUNDED important at first glance, but upon further investigation, turned out to be largely a reference to existing information.  The only x-factor was that "unnamed Chinese officials" said that China is planning on buying even more Treasuries than recent regulatory data suggests.  Not that big a deal, and markets corroborated that assessment by unwinding the gains fairly quickly (but only the gains that followed the China headline).

The rest of the overnight gains remained intact, leaving bond markets to close at the year's best levels for the 2nd time in 2 weeks.  All of the above having been said, I'm more inclined to view it as a "lead off" ahead of Thursday's events, rather than an indication of an inevitable rally.  In other words, Thursday's events (ECB Announcement and more importantly, the Comey Testimony) could still set the tone going forward.