Yesterday morning, bond traders held off on more meaningful selling until they could rule out a big miss in the ISM data.  That would normally mean today could provide a clearer look at organic momentum as there are no major reports on tap.  But in the current case, there is still plenty of anxiety about what the following three days hold. 

Wednesday is more of a "set-up" day, where traders will try to use ADP and ISM data to get into position for the end of the week.  Yesterday's action suggests the path of least resistance is to sell bonds when the opportunity presents itself, with the goal of re-entering more positive momentum if technical supports hold.  In that regard, today can actually be a good, small-scale acid test as to just how much negative bias there is.

So what are those technicals? 

First of all, today would have to be pretty awful in order to break to any weaker territory than we saw in mid February.  But it would only need to be modestly weaker for 10yr yields to re-test the 100-day moving average that has recently acted as a rough line in the sand for the upper bound.  The 21-day moving average is on the opposite side of the road, and we'd need quite a brisk rally to break it.  Frankly, that would be a surprise in light of the cards that were apparently shown yesterday.  It's a very good time to be extra defensive against further weakness as opposed to optimistic about another major thrust in the long term trend toward lower rates.