One of the biggest surprises I encountered as I've learned about bond markets (and financial markets in general) over the years is just how big a role is played by human people.  There's a tendency to think that the market is so big, complex, fast, and automated that the individual human person couldn't possibly matter.  Indeed, when we're talking about any random person, that may be true.  But if you take a key player out of the mix, things start to change.  If holiday-related absences take multiple key players out of the mix at the same time, it's even more noticeable.

With Christmas happening on a Tuesday, it's a prime candidate to create a 4-day weekend (or more) for many of those players.  What does this mean for markets?

The base case is that it means bonds will favor narrower, more sideways ranges.  That doesn't always happen, however, if traders with big agendas or needs are trying to make something happen.  In those cases, rates can actually move more than they otherwise would because there aren't enough key players in the office to create balance.  That scenario dovetails into the last eventuality, which simply holds that trading levels tend to return to where they were before holiday-fueled illiquidity took them on an unexpected ride.  The only catch is that we sometimes have to wait until after the holidays.

In other words, if bonds don't hold inside the new consolidation range that looks to be taking shape, there's a chance we could be waiting until the 2nd week of January before seeing the same levels return.  Then again, it could be all about economic data.  It hasn't looked like it matters as much recently, but perhaps traders are just waiting for the big-ticket reports (chiefly, NFP, followed by the top-tier inflation reports).  In that case, today's PCE data at 10am is worth watching, even if only to check for a market pulse.