ISM Services data (officially "non-manufacturing") came out at 54.8 vs a median forecast of 56.0.  Admittedly, that's fairly close to consensus, but several of the internal components were a bit weaker.  These include "New Orders" falling to 57.7 from 60.0 and "Employment" falling to 53.1 from 57.2.  Those weak spots were offset by an increase in "prices paid" to 56.6 from 54.0.

Given that the Fed is only really looking for inflation before it can justify a rate hike, every little bit of evidence for inflation moving toward its target is important--especially with a rate hike on the table for December.  As I discussed in this morning's commentary, that's a bigger issue for shorter-term rates, but longer-term rates aren't immune.

As such, any benefits from the headline weakness have been mostly washed out by the inflation counterpoint.  Bonds thus find themselves continuing to trade near the weakest levels of the day, albeit with a slight improvement since the 10am data.