In the week just passed, the bond market set out to digest and react to the Federal Reserve only to end up finding much bigger inspiration.  Wednesday's FOMC Minutes were never too incredibly likely to inspire much volatility, and they stayed true to those expectations.  Friday's Jackson Hole symposium offered a bit more guidance.  Powell had a slightly dovish lean that helped bring bond yields gently down from the week's highest levels.  We'll never know how much bonds would have followed through because just one hour after Powell, Trump trade tweets (US companies "ordered" to bring operations back home) rocked the market.  In just a few hours, we'd gone from the worst levels of the week to the best.

In the week ahead, traders will have to ask themselves how much the economic data will matter compared to the effects of potential trade war updates on future economic data.  In other words, are we going to sell bonds today if this week's econ data is strong or buy bonds because trade war escalation implies weakness in the future?  The answers are maybe and yes, in that order, but of course there are different types of traders buying and selling for different reasons.  The baseline expectation would be to give the economic data SOME respect as a potential market mover, but for the broader momentum to be dictated by technicals and trade tweets (or absence thereof).

All of the above has made for a shift away from any previously discussed sideways range or consolidation pattern into some sort of expanding cone of volatility.  Given the nature of the underlying motivations, we'd be justified in the assumption that hitting the upper yellow line would require more convincing than the lower yellow line.