Overnight volume in bond markets is about as high as I've ever seen it.  In general, we use a benchmark of 1 million 10yr futures contracts as the bar that needs to be cleared in order for bonds to be considered "actively traded" on any given day.  That needs to happen by 5pm ET, to be clear.  The overnight session saw more than 1 million contracts by 6am--well before the domestic session even began.

In other words, this has clearly been a huge deal for the market.  That said, there's a very real possibility that it was a 1-day deal.  With that much volume and without an extension in the bond market rally, we're faced with the possibility that we just experienced a "flash crash" type event in stocks and that--like every other correction in the past 8 years--this one blows over and gains continue.  Granted, this one was bigger in outright terms, but stocks also had more to lose at prevailing levels, not to mention a more stark absence of volatility to make up for.

On a somewhat disconcerting note, the overnight bond bounce occurred precisely on an important technical level.  It can be viewed as the 2.66% line (which I said yesterday would be the most important line in the sand if bonds wanted to signal a broader shift) or in the form of the Bollinger Band in the following chart (the middle wavy yellow line).  In terms of momentum metrics, yesterday's rally barely scratch the surface

On a qualitative note--and speculative at that--I will say that I would be surprised if we are about to see the much-feared "big correction" in equities markets just yet.  I tend to save this sort of speculation for more informal conversations in the MBS Live chat, but for whatever it's worth, I've been thinking about a 6-18 month window for the next big shift in bonds and equities to materialize.  Yesterday felt too soon, but anything could still happen in today's trading session.  That said, I think it makes all kinds of sense to conduct lock/float strategy as if this is NOT the big turning point.