About 10 days into July's bond market rally, I posed the question: What if 2015 doesn't turn out to be the big bounce?  It started out with the following thought:

What if it's all not enough--the multiple iterations of QE at home, ongoing QE abroad, ultra low rates for longer than they've ever been ultra low, and a generally consumer-friendly inflation environment, among other things? What if this is not enough to get the engine of global growth firing on all cylinders?  What if early 2015 has just been a pause for reflection and the decades-long bull market in bonds actually gets back on track in the second half of the year?  This is a question that has increasingly been on investors' minds as they ponder the Fed's rate-hike rhetoric. Is 2015 really the best time?

I was thinking about Fed rate hike rhetoric at the time, but forget that!  After the past two days, we may well be seeing markets begin to answer the simpler part of the question.  What if everything that should be driving global growth ends up being unable to do so? 

Investors are increasingly answering that question with their trades.  The fact that it coincides with a tremendously negative technical environment in equities markets is just fuel to the fire.  Same story with Oil weakness being exacerbated by oversupply.  The only thing keeping bond yields from dancing around all time lows right now is an absence of domestic QE and the incessantly annoying prospects for a Fed rate hike despite what looks an awful lot like the writing on the wall.

Incidentally, those last two ingredients have made it hard for bonds to reap their normal share of benefits from global weakness.  10yr yields dropped a measly 2.8bps today compared to an utter and complete route in all major stock indices.  MBS eked out an eighth of a point improvement.  The saving grace is that these gains arrive amidst and already strong rally--one that's been underway since July 14th.  Be aware though, they look more and more unwilling to continue that rally without major justifications.  A 57 point loss in S&P futures today barely cut it!