You've no doubt run across the phrase "the beatings will continue until morale improves."  That's not too far from being an apt assessment of an uptrend in rates.  To make it a little more wholesome, we might instead say that the selling will continue until traders feel like buying again.

Yesterday's 10yr auction strongly suggested that buyers are not yet enticed by current bond market yields.  The problem is not a simple one, however.  There's not just a magic line in the sand, above which bond traders will suddenly be interested in stepping in and reversing our current curse.  It's much more of a moving target--one that depends on how other parts of the market are behaving.  

With that in mind, let's check in with stocks.

2017-5-11 open

Yikes!  They're right on the edge of a confirmed break into new record territory.  We know that stocks and bonds aren't the perfectly-correlated partners that almost everyone thinks they are, but we do know that bonds tend to "pay attention" to the bigger developments in stocks.  For instance, if it looks like stocks are going to undergo a big correction lower, bonds tend to rally moderately to get in position to take advantage of all the safety-seeking cash soon to be freed-up.  

Conversely, if it looks like stocks are staging for a big break higher, bonds will tend to feel some selling pressure as those dollars position themselves to take advantage (read: sell!) of potential stock momentum.  All of the above can be seen in the following chart where Treasuries are reluctantly falling (errr... rising?) in line with the broader "risk-on" move.  

2017-5-11 open2

Today's main event is more of a general notion--the same notion that's been adding to weakness over the past several days: supply.  The 30yr bond auction at 1pm is the last Treasury auction of the week.  If there has been any pent up anxiety about trading positions due to this week's supply, we would normally see some relief this afternoon.  Unfortunately, tomorrow morning's economic data might motivate some traders to wait on such decisions.  I know I probably wouldn't put all my cards on the table until then.