There have been no significant instances of economic data this week until today.  These sorts of things happen, and it's usually Thursday that ends up breaking the dry spell.  That's only really a guarantee based on the steady weekly presence of Jobless Claims, but that's pretty boring data these days.  We already know that things are humming right along in terms of payrolls and other metrics that lean on tallies of who is working vs not working.  As such, Jobless Claims data isn't really interesting any more. 

That puts the focus squarely on Retail Sales.  This is a strong market mover, on average, and today has as much potential as any example.  We're almost guaranteed to see a bounce back into positive territory for the important "excluding autos" metric (which is Retail Sales excluding motor vehicle sales and parts).  Here's how that report has looked recently along with the forecast for today (another negative reading would offer a perplexing counterpoint to other economic indicators and likely be very bullish for bonds):

If domestic data isn't up to the task of motivating Treasuries and MBS, Europe has been.  That said, the amount of positivity filtering through to US bond markets from Europe has been muted of late, and that's being generous.  In fact, there's been a full-on party heading into March, replete with new all-time lows in German Bunds, domestic stock weakness, and what are essentially new all-time lows in the Euro (the only time it was lower was when it was just getting off the ground in 2002).  Yet US bond markets have clearly been locked out of said party. 

What changes this?  That's a good question.  Breaking the line in the chart above would merely be like crossing the threshold into the aforementioned party.  From there, it would be on to bigger-picture technical levels in the 2.04-2.08 range. 

On a final note, keep in mind that the afternoon brings the last Treasury auction of the week with 30yr Bonds at 1pm.  While the auction itself may or may not be a big market mover, this week has more potential than most auction weeks to see some relief on the part of bond traders following the end of the auction cycle (i.e. post-supply rally).  Of course a post-supply rally would merely look like Treasuries outperforming other markets if we happen to be moving into weaker territory, but all things being equal, it's safe to say that bonds were a bit more cautious heading into this week, and probably have more room to let that guard down unless new threats emerge.