Last week saw a steep sell-off in bond markets as low volume and a limited amount of participation paved the way for domination by whichever side of the trade showed up in greater numbers.  It turned out to be "the sellers" leading up to the Christmas Holiday in the US, but as we said then and will continue to say this week, we can't really read much into trading levels and ostensible directional sentiment based on this year-end, illiquid trading.

This week promises to be similar to the last in the sense that light volume and liquidity could give way either to periods of apathetic sideways movements punctuated by exaggerated swings, but neither being motivated by anything especially meaningful or alarming.  With the US Holiday just passed, another on the way this weekend, a shortened trading day on Friday, and even a UK Holiday today (Boxing Day), many market participants will simply extend last week's theme of "the trading year being over."  This week sees some more harmony between that fact and the economic calendar (thankfully).  Whereas last week contained a round of Treasury Auctions as well as a fair bit of data into the last 2 days, this week's economic calendar will work in more harmony with the general tenor of another holiday-shortened week.

Today's key release will come in the form of Consumer Confidence at 10am, although Case Shiller Home Prices are forthcoming.  Tomorrow will be completely dead in terms of market movers with only MBA mortgage application data.  The only other data of any significance comes on Thursday with Jobless Claims and Pending Home Sales.  Friday's reports are relative non-events and Bond Markets are scheduled to close at an earlier-than-normal 2pm Eastern.