• Momentum was weaker into the morning
• European bond gains helped Treasuries hold under supportive ceiling
• Stocks kept arguing for bond weakness, but Europe and Treasury Auction turned the tide

Things were tense for the entirety of the AM hours today as 10yr yields bounced near a technical ceiling of 1.80 incessantly.  Most of that bouncing occurred before domestic trading began for the day, but there were at least three more solid attempts before 11am.

Heading into the 11am hour, stocks broke their own short term ceiling.  That would normally be a concern for bond markets--especially when stocks are potentially breaking the parabolic ceiling in the following chart--but European bond markets were already leading Treasuries back toward lower yields (that time of day is still active in Europe due to end-of-day trading).  

A stellar 10yr Treasury auction only confirmed bond markets' defiance of the stock gains.  10s ended the day only 1bp lower, but that was more than 3bps lower from the highs.  Fannie 3.0s picked up 3 ticks and several lenders repriced positively in the afternoon.

You'll notice I ignored economic data, as did financial markets.  This is very telling considering Retail Sales is typically a market mover.  To be fair, the weak Sales data did temporarily help bonds, but they were back at the weakest levels in less than 90 minutes.