There’s age old market wisdom that loosely suggests any given move should be taken more seriously if there’s a lot of volume behind it. Deductively, we might conclude that moves backed by exceptionally light volume could be taken less seriously. To whatever extent it makes sense to do such things (and it rarely makes sense to brush off market weakness), today would be one of the best candidates.
Much of the rest of the world was closed for business in the overnight session, with the only heavy lifting being done by Tokyo (i.e. Japanese traders were primarily responsible for making trades that moved bond markets during those hours). That made for almost non-existent volume in the overnight session, and only a modest amount of weakness.
The domestic hours saw additional weakness, however. And by the time we factor out the tax on volume due to European markets being closed, it was actually a slightly less than appalling session. Unfortunately, that means the negative momentum was a bit better supported than it may have seemed at first glance. If there’s a saving grace, it’s that the recent rate ceiling (just under 2.62% in terms of 10yr yields) was far from challenged by today’s high yield of 2.592.
The rest of the week should pick up noticeably in terms of volume and perhaps volatility. That said, traders could be waiting for the significantly more relevant schedule of data and events set for the following week (Fed, NFP, and multiple big-ticket reports).