After bottoming out on Friday morning following the Retail Sales, bond markets began progressively losing ground.  On Friday itself, the result was more of a sideways drift at levels that were still quite a bit stronger day-over-day.  In the overnight session, however, bonds began losing ground in a more directional way.

Counter-intuitively stocks rose despite weaker data in China.  The easy--and possibly even accurate--explanation is that all the recent weakness is fueling expectations for additional stimulus measure from China's central bank.  Indeed, Chinese equities markets led the charge back toward stronger levels for global stock indices.

The positive move in stocks pushed 10yr yields as high as 2.087 by 7am.  Bonds traded sideways near those highs until the 8:20am CME open (Treasuries are still trading before 8:20am, but the CME open marks the start of the day for a big contingent of market participants).  Traders were lined up to buy at today's CME open, despite a relative absence of positive cues in other markets. 

Positive cues ultimately arrived after the NYSE open as stocks and oil began to slide.  The S&P gave up more than half the overnight gains and oil prices lurched back under $29/barrel.  Bond markets briefly turned green in response, but are now back barely into negative territory.  Fannie 3.0s are down 2 ticks at 101-05 and 10yr yields are up 1.55bps at 2.052.  The bounce coincides with similar bounces in equities and oil.