Both Wednesday and Thursday saw bonds hold their ground and make modest intraday improvements. Both days contributed to the possibility that Tuesday's highs had served as some sort of buying cue for bond traders who had possibly seen enough selling. The result would be a new sideways range from 3.84 to 3.99 with the next breakout to be informed by data. With yields only up to 3.97% in early trading, there's still a chance that such a range will hold, but this morning' PCE data is making things interesting.
Fed Funds Futures clearly thought it was something other than irrelevant, even if not on par with previous shocks from NFP and CPI earlier in the month.
PCE inflation data hasn't been worth much market movement recently--mostly because CPI comes out 1.5-2 weeks earlier and tends to bring the same message that PCE brings, even if the outright levels are a bit different. This time, however, PCE is telling a more inflationary tale, which could be why it has been worth a bigger-than-normal reaction today.