So much for that September swoon.

Despite the recent losing streak, the S&P 500 is still poised to close out its best September in three years, and this all comes in the face of Syria, continued dysfunction in Washington and agita about the Federal Reserve (more on that later).

But stocks weren't the only surprise in September. The real shocker was the surprise performance in bonds.

The 10-year is having its best month since April.

(Read more: Expect a relief rally in bonds: JPM)

Curiously enough, the move up in Treasurys prices (yield and prices move inversely) started well before equities started to head south. And despite some decent economic data over the past two weeks, there hasn't been much renewed taper talk. Maybe that's because the market views Janet Yellen as more of a dove than Chairman Ben Bernanke.

(Read more: Brace for 'Octaper' or buy dips?)

So what is behind the move in bonds? Perhaps it's the mild decline in equities, which sounds pretty crazy. I think the more likely reason for the move is the continued chaos out of Washington. Shutdown aside, the government's very close to running out of money unless it raises its debt ceiling limit.

That debate will dominate the tone and tenor of trading in likely driving the price action in bonds Thursday. In the absence of any additional news, I believe the bond yields will continue to creep lower until we see significant employment data.

So what's my move?

I would be interested in buying the 10 year at the current level of 126.05 with an upside objective of 127.15. A trade of 125.15 on the downside would stop me out and change me back to neutral.

—Jim Iuorio is the managing director of TJM Institutional Services. Follow him on Twitter @JimIuorio.

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