The very short version of a very long story is that bond markets are leveling-off within a range.  Using the 10yr yield as a benchmark, that range is something like 2.13-2.20%  In terms of Fannie 3.5s, it's 103-20 to 104-00. 

If we wanted to make the short story longer, here are a few of the concepts we might include in our outline:

• Per the Day Ahead, recent corrective selling has been leveling-off.
• Several Fed speakers have been much more 'dovish' recently, meaning they've seemed less eager to raise rates in September.
• There is a concentration of Fed comments coming out yesterday and today owing to the annual Jackson Hole symposium. 
• Whereas earlier comments were dovish, markets read something else into comments from Vice Chair Fischer.  While he too managed to be dovish overall (expressed concern due to recent developments), the takeaway from his comments was that the Fed is definitely planning on raising rates soon, UNLESS the recently concerning data continues over the next 2 weeks.  By invoking the next 2 weeks, Fischer tacitly confirms a rate hike is very much still on the table for September

Bond markets improved with the earlier comments and sold-off following the Fischer comments.  Other considerations include another day of relative stability in stocks and an even bigger spike in oil prices (rebounding from recent lows).  I will say that oil prices look to be a follower and not a leader this week.  Oil moved higher only after stocks and bond yields began rising, both on an indraday and day-over-day basis.

On a potentially unrelated, but still interesting note, if we weren't looking elsewhere, we might conclude that domestic bond markets were responding to sharper movement in European bond markets. German Bund yields spiked on Tuesday morning and have continued bouncing around the important technical ceiling of 0.75%. They did the same thing this morning, and Treasuries seemed to be following rather than leading. Incidentally, Treasury selling stopped when Bund trading closed.