Jobless Claims were exceptionally strong this morning, coming in low enough for such cute headline phrases as "lowest since 1973."  True, the number is indeed as low as it's been since 1973, but--well, there are so many "buts."  We'll forgo a discussion on the biggest counterpoints (like benefit exhaustion and job/wage quality) and instead focus on the biggest "but" today, which is that no one was around to file Jobless Claims last week!  The labor department even noted the seasonal issues in today's release.  As such, traders took it with a grain of salt.

It may have seemed like bond markets simply had a delayed reaction to the economic data, considering MBS and Treasuries weakened shortly thereafter, but there were other sources of market movement.  These included bigger moves in forex markets and a series of new corporate bond announcements.  But even then, Treasuries held firm at important technical levels (2.34 in 10yr yields).

The first stage of the elegant swan dive in rates began around 11am.  European markets were closing and domestic equities markets were falling even more sharply.  As we discussed in the Day Ahead, equities were worth watching today, but perhaps even more relevant than equities was the retreat in commodities prices.  Of course, commodities can take a hit as a barometer for the global growth engine, so there's always a chicken/egg discussion to be had, but regardless of which sector caused the most movement in the other, the fact remains that multiple sectors moved away from bets on growth.  Bond markets benefited from that--end of story.

Epilogue.  Because I know some folks might notice that we had some of the day's sharper gains at 1pm (second stage of swan dive), and that there was a 10yr TIPS auction at 1pm, we should talk about that for a second.  These things had absolutely nothing to do with each other.  The Treasury/MBS gains were in by 12:57pm, and had perfectly traced with steep selling in Crude Oil.  When the auction hit, bonds actually lost ground, at first.  Bottom line, the good old "global growth concern" dialogue is making a comeback.