While there is more economic data on the calendar today, bond markets continue to look elsewhere for inspiration.  Geopolitical risks, fiscal policy, Fed policy, currency fluctuations ongoing downtrend in stocks...  all these things have been moving bond markets much more than most economic reports.  The recent combination of this group of factors has clearly been positive for US bond markets, resulting in a clearly-defined downtrend that has broken through the post-election trading range.

The only order of business at the moment is to keep an eye on this trend.  It represents the slow death of the post-election Euphoria.  We can refine and reassess our ideas about that desuetude whenever this trend is broken.

In the chart above, both of the lower panes are stochastics--a technical overlay that measures momentum.  When the lines approach the lower horizontal line, bonds are considered 'overbought.'  This is a pretty useless and confusing term that doesn't mean much more than"traders have been buying more and more bonds.

The often-false conclusion made by technicians (analysts who follow markets solely based on charts and math) is that hitting overbought territory implies a bounce higher.  While this is often true when markets are range-bound, it's not nearly as reliable a conclusion when we're embarking on a new trend.  Such trends often see extended stays in overbought or oversold territory.  We'd really need to stochastics break more than halfway back toward the upper (oversold) lines before concluding that something different was happening in the bigger picture.

For now, the conclusion remains that this trend is our friend until it betrays us.

Rather than keep an eye on technical indicators, when bonds are being driven by geopolitics, fiscal/monetary policy, etc., it makes more sense to keep an eye on the best representatives for those market movers.  For example, Yen is a good representative for the global risk-on/off trade, and it's been joined at the hip with US bond markets.  The day-to-day directional influence from equities markets is also apparent--even if the correlation isn't perfect.