Between this morning's economic reports and opening tradeflows, there was quite a bit more volume early in the day.  This was almost exclusively in response to the ADP and ISM data.  Both were exceptionally strong, and both had clearly-delineated impacts.

ADP was first up at 815am.  Coming in at 246k vs a 165k forecast, the immediate conclusion was that NFP Friday might be even more challenging for bonds considering the existing forecast of 175k.  ISM Manufacturing data at 10am didn't help the cause.  The employment component came in at the highest levels since 2014 (as did the headline PMI for that matter), further adding to the case for a Friday surprise.

Bonds agreed and sold off to the highest yields of the week in the 10am hour.  We managed to stay sideways until the 2pm Fed Announcement, and that's when the healing began.  

It's not that the Fed said anything cautious or dovish.  In fact, most of the changes to the statement could have been read as hawkish (unfriendly to rates).  Rather, rates benefited from the absence of any changes in the Fed's forward guidance.  In other words, they said nothing about increasing the frequency of rate hikes or removing any existing policy of reinvesting interest from the Fed's portfolio of bonds.  Rates fell after that, mostly erasing the damage done by the economic data.