The past 3 days were disconcerting for bond markets--especially yesterday, which saw yields move higher at their quickest pace in two weeks.  This threatened to reverse the positive trend that looked like it was confirmed by last Friday's CPI-driven rally.  But as we discussed in the recap yesterday, 2 simple levels would need to be broken before it was anything other than a consolidative pain trade.

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.

With the benefit of a few more hours of overnight trading since then, things are looking up to begin the day.  Or at the very least, bonds have backed away from the "2 simple levels" mentioned above.  As long as we hold under 2.37 and 2.40, we're still in the game.  It would be even nicer to see a break below 2.28%, however, to fully signal the start of a new trend.

Like yesterday, today will be more about the trading than the data and events.  Morning economic data isn't top tier, and bond markets are more interested in reacting to tradeflows and technicals anyway.