After the Rally: Stocks Resume Digestion

Hornbarger says the subsequent rally (in price) was largely technical, saying that when the 10-year yield fell below 4.80%, buyers jumped in to send it further down.

"In the topsy-turvy conundrum world we live in, it is hard for me to make a really bullish case for bonds, unless I were to believe we're going into a hard economic landing," says Hornbarger, who expects the 10-year yield to remain in a 4.8% to 4.9% range.

Tuesday's Fed speakers were mum about interest rates and the economy. Indeed, Fed Chairman Ben Bernanke didn't mention monetary policy in his speech to the Greater Omaha Chamber of Commerce. Instead, he wandered into the topic of inequality among Americans due to widening gaps in technologically savvy education. He also noted that the lack of unions and globalization as reasons for the rising inequality. But Bernanke emphasized that protectionist policies are not the answer to improving opportunities for people in the U.S.

Chicago Fed President Michael Moskow didn't reveal anything about monetary policy in his speech, and San Francisco Fed President Janet Yellen kept her remarks to the topic of China's currency, the renminbi.

While stock and bond traders are not yet focused on foreign exchange, the upcoming G7 meeting could provide a start to currency markets and therefore other asset classes.