It got much worse.  Bond yields were up more than 8bps by the open with the 10yr just a hair under 1.47%.  It might be hard for traders to avoid ringing the 1.50% bell even if bonds manage to bounce today or in the next few days.  The kicker is that the weakness lacks the sort of discrete, obvious headline/data motivations that make for satisfying levels of understanding.  It continues to be a move driven by big-picture momentum, short-term stop-loss triggers, technicals, asset manager reallocations, month-end trading, convexity hedging, and other esoteric, behind-the-scenes factors.

From a purely technical perspective, the additional weakness was a risk based on the breakout of the longstanding trend channel last week (yellow lines below).  The risk now is that traders will aggressively try to get yields up to 1.50%, not only because it's a nice, round psychological level, but it also fulfills an "opening gap" from Feb 24th, 2020, when the covid rally really kicked into a new and higher gear.

20210225 open1.png

The longer a sell-off lasts and the higher yields go, the more likely it becomes that we see a bounce.  The only catch to that assessment is that it only applies in relative terms.  In other words, we don't know HOW probable the bounce was/is, only that more weakness increases the odds of strength at some point.  The past 2 weeks suggest it's a bad idea to bet too heavily (if at all) on said bounce.