Everything seemed so simple last Friday when bonds were surging past technical barriers in strong volume--ostensibly ringing the dinner bell for more bond buying.  The fact that everything seemed so simple was also the biggest risk.  Perhaps it was "too simple."  Perhaps the technical conclusions were too obvious.  The weakness so far this week shows us why.

The weakness was easier to brush off as a modest consolidation of last week's strength yesterday.  At that time, none of the losses were so severe as to suggest we question the reversal leading back from the high yields seen in early October.  If that didn't change today, it became a much closer call.  

10yr yields rose more than 4bps and Fannie 3.5 MBS fell a quarter of a point.  The selling transpired with precious little justification in terms of fundamentals (economic data, news headlines, or Fed policy).  There was also precious little volume, or at least lower volume compared to yesterday.  

What we're left with--for now--is a classic little pain trade for bond bulls; a push back against the obvious technical implications of last week's gains.  Until and unless 10yr yields break above key technical ceilings at 2.37% and 2.40%, this is still just a consolidative move, but admittedly a more uncomfortable one than it was 24 hours ago.