Throughout the week, we've had our eyes on the long term downtrend in rates stretching back to the beginning of 2014.  It provided some context for the relatively brutal uptrend that's taken shape in September.  Until this morning, we could say that yields were STILL inside that long term downtrend.  But now this morning's weakness now presents the biggest break of that trend we've seen since it began.

Even now, it's too soon to conclude that it's "game over" for bond markets in 2014, but unless we see an impressive rally into the close today, we've effectively lost a layer of insulation against that risk.  The only hopeful thing about breakouts like this is that they can sometimes be the signal that markets were waiting for before pushing back on a trend.  In that regard, a nice afternoon bounce back could be encouraging.

As for the minutia, Treasuries were a few bps higher overnight, and without regard to any specific events or headlines.  Fannie 3.5s opened an eighth of a point weaker and gradually lost another 6/32nds by 11am.  10yr yields were up as high as 2.607 by then.  Data didn't matter--as has been the case almost universally of late.  After 2 solid bounces at 2.607, Treasuries are leading a bounce back to slightly better levels with Fannie 3.5s now down only 6 ticks total (101-19) and 10yr yields up only 3.4bps to 2.585.