The market's starting to look further ahead. There seems to be the sentiment that the economy will cool and the Fed (once it hikes interest rates later this month) will be done.

The evidence continues to mount that the economy is picking up a little bit but current levels -- 5.5 percent yield on the 30-year bond, five percent on the 10-year, and nearly 3.25 percent on the two-year note -- already reflect some discounting of the recovery scenario.

There are fears the data will be strong and Greenspan will lay the groundwork for tightening. In that environment, how do you bring in buyers?

The bottom line is, agencies will maintain their highest credit rating. Agencies are looking like pretty good value.

The view is that the market could withstand a 25 basis point rate hike.

The market took the report in context -- which is that it is often distorted by aircraft orders. It didn't really ignite the bond bulls that the headline number was down so much.