Bond markets' willingness to accept guidance from economic data is in full swing.  As discussed in the Day Ahead, this morning offered several more opportunities to demonstrate that willingness.  This resulted in a rather logical rally following generally downbeat data.

NY Fed's Empire State Manufacturing was the most downbeat of the bunch, coming in at -1.19 vs +7.0 forecast.  45 minutes later, the Industrial Production numbers dropped -0.6 vs -0.3 forecast.  In both cases, the internal components were weak.  The only compelling counterpoint was the slide in Industrial Production was largely related to a decline in energy production versus the much colder month of February. 

Bond markets weren't too concerned with those counterpoints as they rallied steadily into the NYSE open.  They've been holding those moderate gains ever since.  If anything, they're favoring the stronger levels of the day (10yr yields in the 1.87's), but haven't yet moved to test the important inflection zone from 1.84-1.86.  Breaking that range would be a sign of firmer commitment, and it could require a fresh supply of weak data over the next few days.