Today's key scheduled event was the release of the ISM Manufacturing PMI--one of the several most important reports after the perennial heavy hitter, NFP (aka, the jobs report, which also comes out this week).  The Manufacturing PMI has been stuck in a rut with the numbers indicating a contraction in the sector since last August.  They were forecast to continue that trend today, but instead, we got the first expansionary numbers since July 2019.

Given the bond market's willingness to react to last Friday's Chicago PMI (a sort of regional version of the national numbers represented in the ISM PMI), it was no surprise to see yields rise in response.  This hit an already weaker bond market and threatened to take yields back above Friday's highs (1.592% in 10yr yields).  

More of a surprise was what happened next.  10yr yields only moved as high as 1.575% before promptly returning to lower yields.  In just over an hour, all the damage was undone and in the next hour, bonds continued to improve--ultimately ending the day near the lows seen during the overnight session (1.525%). 

Late day European bond market strength, a reversal in the stock market, and plain old "buy the dip" mentality in Treasuries underpinned the move.  Some would suggest a trade-related headline was also a culprit, but correlation is more defensible than causality given the timing of the news and the related volume of trade.  An easier case can be made for the next wave of bond-buying (heaviest around 11:30am ET) when a CDC headline confirmed 11 coronavirus cases in the US. 

Bonds will continue juggling coronavirus news against the economic picture as the week continues, but tomorrow is light on data.