At the onset of gastrulation, the epiblast cells in the region that defines the posterior part of the embryo undergo an epithelial to mesenchymal transition and form a transient structure known as the primitive streak from which the mesoderm emerges.
The newly formed mesoderm migrates away from the primitive streak and is patterned into various populations with distinct developmental fates.
Brachyury is expressed in all nascent mesoderm and down regulated as these cells undergo patterning and specification into derivative tissues including skeletal muscle, cardiac muscle, kidney, blood and endothelium.
The first mesodermal cells to develop within the embryo contribute predominantly to the extraembryonic tissues, giving rise to the hematopoietic and vascular cells of the yolk sac.
Hematopoietic progenitors are found in the developing yolk sac as early as day 7.0 of gestation, approximately 12 hours following the beginning of gastrulation.
Flk1, the receptor 2 for VEGF, is expressed in the yolk sac at this stage and is essential for the establishment of the blood cell and vascular lineages.
References
Kimelman D. Mesoderm induction: from caps to chips. Nat Rev Genet. 2006 May;7(5):360-72. PMID: 16619051
Morali OG, Jouneau A, McLaughlin KJ, Thiery JP, Larue L. IGF-II promotes mesoderm formation. Dev Biol. 2000 Nov 1;227(1):133-45. PMID: 11076682