With two trading days down so far this week, bond markets have shown their cards, or at least that's what they want us to think.  The "cards" in question simply refer to the sideways range that's been intact since the Italian election drama at the beginning of last week.  In the European hours of Tuesday's session, even headlines that suggested possible political traction and the potential presidential appointment of another technocratic government were NOT enough to motivate any harried moves ("another" refers to the late 2011 unilateral appointment of technocrat Mario Monti by the Italian president.  Monti is ostensibly part of the solution in Europe, and thus not popular with Italians and at least in part responsible for higher domestic interest rates).

One would think that hints at another Monti-like appointment would then be negative for interest rates.  In fact, they might have been, but the other Italian news (that they might try to scrape together some sort of government without going back to elections or presidential appointment) coupled with stronger economic data dilutes markets' confessions of causality.  What we do know about Tuesday's weakness is that it wasn't particularly bad, and in fact, remains perfectly inside the post-election range.  Even though volume was mum on Monday, it picked up yesterday and we may well conclude a certain determination to stay "sideways to slightly weaker" ahead of tomorrow's ECB and Friday's NFP when we consider the past 6 sessions being tidily contained thus:

Today's headliner is limited and stands at least as much of a chance to be a non-issue as it does to completely devastate (or excite?) bond markets.  We're only talking about ADP Employment here.  Though it's flanked by MBA Mortgage Applications and Factory Orders this morning, ADP is that lackluster ball player than can occasionally knock the cover off the ball and run the bases in slow motion when it comes to blindsiding range-bound bond markets with the suggestion that NFP expectations be quickly repriced ahead of the official Employment data that almost always follows 48.25 hours later.  If we make it through that without any major surprises, we move on to waiting for Central Bank headlines (mostly from the ECB tomorrow morning, but several other Central Bank meetings will report over the next two days and in the age of "currency wars," they may begin nudging the range early.