You'll notice an ongoing theme over the past few weeks as we talk about the selling pressure in bond markets, and that is that this sell-off should be taken seriously until/unless it's definitively defeated.  We've already pointed out that the correction in German Bunds is bigger than any other example in nearly 2 years.  And in terms of the amount of ground covered in a 2 week period, it's the biggest Bund sell-off in at least 10 years.  In other words, it's big deal, and something serious is certainly happening.

It's the kind of move where you assume it's "the big one," batten down the hatches, and wait for the storm to pass.  After it looks like the storm has passed, you'd still want to wait a bit longer to make sure it wasn't merely the eye of the storm.

We were subjected to another sobering dose of seriousness this morning after weaker-than-expected ADP numbers failed to provide any meaningful relief in the ongoing rout.  Bunds rose a full 10bps from .51 to .61, which translated to a mere 6bp rise in Treasuries and an even more tolerable 6 tick drop in MBS prices.  Though tolerable from a relative standpoint, the MBS weakness has still been more than enough to prompt multiple negative reprices.