The US version of 2015's massive bond market movement doesn't make for very riveting analysis.  It's not the sort of thing that will be very satisfying--neither for you to hear, nor to explain to others.  In fact, it could even be a bit anticlimactic and, at worst, open to skepticism.  But none of that makes it any less true.

It's largely a story of trading positions.  Positional considerations are a relatively constant theme in our discussions, and early 2015 is not exception.  Every time we talk about a snowball move, we're talking about the positional dominoes that can not only exacerbate moves, but even take on lives of their own.  After listing the positional considerations as a key ingredient in yesterday's sell-off, I've been happy to see more and more confirmation for the idea, not only around the proverbial campfire, but also in the news.  Here's a good one.

While the pace of February's weakness is most unfortunate (indeed, there are a lot of bad things we can say about it, and I think I said half of them yesterday), we're still fortunate to have so much of it be driven by these positional considerations.  It means that some of the most important, steady-handed, big-picture bond market cues are not quite telling the same story.  Granted, we shouldn't expect to rally in lock-step with Germany--the benchmark for the European bond market--but we can certainly expect European bond markets to have as much say as anything about the long-term trends. 

In much the same way that MBS follow Treasuries with varying degrees of correlation, Treasuries are following German Bunds in turn.   The time frame from the end of 2014 to the beginning of this year has essentially seen Germany move lower in yield in a far more level-headed fashion (in terms of trend direction, not necessarily outright levels) while Treasuries have whipped around on either side of that German reality.  The lower portion of the following chart shows that.  The upper portion shows the respective pain trades in Jan and Feb.  It also shows what I would consider to be the best moderately aggressive long-term trend channel for Treasuries. 

The takeaway from the upper chart is that January was overheated in some sense and February moved to restore balance.  Additionally, if you want to think of it as saying "plenty of room to run without breaking the long term trend," you'd be well within your right.  The takeaway from the lower portion is that Germany is still pretty flat and US Treasuries are just freaking out a bit, relatively speaking.

Some of the most recent freakout could also be due to hedging against today's FOMC Minutes.  Some market participants think these will reveal a Fed that's much more willing to hike rates in June than trading levels currently suggest.  We'll see what we'll see at 2pm.  Before then, the domestic data is 2nd fiddle to late-day Eurozone news and market movements.