Bonds got off to a weaker start on this Fed week, and there weren't any convenient scapegoats in sight.  That said, there were a few caveats.  Most notable, it was the 2nd lowest volume day of the year for Treasuries, and that's an environment that allows a smaller trading imbalance to have a bigger effect on prices and yields.  While we might have hoped the correction that took rates higher last week had run its course, there was still some room to run.

10yr yields pushed up over 2.23% today, rising just over 3bps.  While that's the highest level in exactly a month, it's somewhat refreshing to see bonds merely sell-off casually as opposed to getting caught up in a snowball selling spree.  Snowball selling wouldn't have been too hard to imagine given the strong performance of 2.22+ as a technical support level.

As has been the case throughout this correction, MBS outperformed Treasuries with Fannie 3.5 coupons losing only 4/32nds (.125) in price compared to 10yr Notes' 9/32nds.

Focus remains on the Fed to deliver the next major dose of momentum on Wednesday afternoon.  And that momentum will likely need Thursday to fully be appreciated.  Between now and then, caution continues to make more sense than any attempt to try to time the bounce in bonds..