By yesterday afternoon, the bond market had managed to string together several of the most reassuring days of 2021.  Today's early losses provide a wake up call as to the nature of the rising rate environment.  

The reassurance and/or hope had to do with the ability of 10yr yields to remain below the recent ceiling at 1.62%.  On the other hand, we really wanted to see a sustained break below 1.50%--something the market clearly rejected yesterday (and the reason we maintained our stance on floating only being an intraday consideration).  The risk is that bonds are pivoting up above 1.50% by treating it as a ceiling at the end of February and floor in March.

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In the bigger picture, that 1.5+ level is right in line with the pre-pandemic lows.  

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Today's break over 1.62% in early trading means the weakness can easily continue.  Further emphasis is added by the fact that there was no obvious root cause for the weakness overnight--just a big move to cash in both stocks and bonds.  Blue line = S&P futures.  Yellow line = 10yr.

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Data is in the back seat today as traders "trade it out" based on technicals, momentum, and positioning ahead of next week's Fed announcement.