Bonds/rates are in the process of defending their castle.  Their way of life inside those walls could be thought of as the general maintenance of a long-term ceiling near 3.0%.  On several occasions, invaders have broken the outer perimeter and attempted to overrun the castle.  It was only with the help of mercenaries from Italy and Turkey that the invaders were ultimately turned away.

To be clear, we're not talking about actual mercenaries.  That was a reference the Italian political drama in late May and the Turkish Lira crash in early August.  Those events both blossomed just as 10yr yields were pushing over 3% and provided enough of a "risk-off" motivation for US yields to recover.

And while the enemy isn't necessarily at the gates to the same extent this time around, they are definitely marching in our direction. For the first time in more than a month, yields are trading well over 2.9%.  Moreover, they're right on the edge of a consolidation pattern that's seen yields move in an increasingly narrow range for most of 2018.  When these consolidations break, we tend to see some follow-through momentum in the direction of the break.

As for the nature of this week's enemy, chances are it would be the same as last week's: an unfriendly economic data surprise.  Whereas the wage growth component of the jobs report did the trick on Friday, this week's usual suspects include producer prices, consumer prices, and to a lesser extent, Retail Sales. 

The biggest among those would likely be Consumer Prices as that data offers a chance to confirm the higher-rate suggestion gleaned from last week's stronger wage growth number.  Specifically, is inflation set to move up meaningfully?  Core CPI has already moved up from 1.8% to 2.4% since the beginning of the year, and 2.4% is the highest reading since before the financial crisis.  Any more upward movement surely couldn't be good for rates.