Last week was relatively impressive and perhaps somewhat surprising in terms of bonds' ability to rally in the absence of overt fundamental motivation.  As we discussed, the covert motivation was/is largely one of trading positions (i.e. shorts covering).  Speaking of things "we discussed," there's also that post-NFP conversation about rally momentum setting the bond market up for a selling opportunity.  If short positions have covered and trading levels are starting the week confirming a bounce at recent low yields, is this the selling opportunity?

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That may depend on the Fed.  We're less worried about what they change in terms of policy and more interested in verbiage changes, dot plots, and the invariable update on whether or not the tapering discussion has evolved.  Is it still something they're "talking about talking about?"  Or has actual talking begun?  If so, is the notion of adjusting the MBS/TSY ratio on the table?  

We're waiting until Wednesday afternoon for the Fed.  Between now and then, Monday will give us an idea of where the bond market's head is at.  Tuesday will give us an idea of how interested markets are in econ data this week as Retail Sales will be out at 8:30am.