Bond markets have been trading calmly and slightly stronger. That said, the strength is more in line with "follow through" from Friday morning's more concerted rally.
For instance, in a market vacuum, if we could observe just one source of motivation at a time, we'd see that movement in either direction is stronger at first and then levels off as it asymptotically approaches it's ultimate price. We'd also see that the points at which prices level-off, tend to have served a similar purpose in the past. Such is the case with 104-00 in Fannie 4.0s today.
The chart below shows how it has come into play in the past and how it's setting the stage for prices leveling-off today. This doesn't mean we're capped out here necessarily, but there is a good amount of 'gravity' heading into tomorrow's Retail Sales data.
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