Bonds Finally Seeing Some Support

Whether one wants to give credit to the big rally in Japanese bonds, the weak labor market implications in the Consumer Confidence data, or the simple matter of re-positioning after a 3.5 day weekend, bonds managed to hit their best 3pm close in 2 weeks. Given the heavy, directional selling in May and the 15+bp recovery from last week's high yields, there's a temptation to view last week a short-term ceiling until further notice. Wednesday's 5yr Treasury auction will be informative in that regard, but it's next week's data that's more capable of informing bigger picture momentum shifts.