Up until yesterday, everything since NFP had been fairly boring in terms of bond market activity.  While there were some instances of moderate movement, they were generally tradeflow-related as opposed to the old fashioned moves that are clearly connected to a major event or headline.  Even last week's FOMC Minutes let us down in that regard.

Then along comes yesterday's Retail Sales data and things change.  This was interesting not only because it was something new in terms of market priorities, but it was made all the more interesting by the fact that the data didn't really seem like it should have motivated quite such a movement at first glance.  Indeed, there are few ways to justify a 6bp rally in 10yr yields on a Retail Sales report that comes in at +0.9 vs +1.0.

The way I chose to justify it--apart from suggesting it was a team effort with several other factors--was to focus on the change in the overall data landscape.  Data hasn't been great lately, and the most significant turning point was the last NFP report.  Up until then, the other economic data could always be foiled by the two recent NFP reports (both extremely bullish).  This opened the door for the other data to matter.  Now it was NFP that needed to be foiled, lest the broader reality of consistently negative economic data take hold more deeply.

Retail Sales coming in at +0.9 last month means the overall level of activity remained crappy relative to where it had been before the 3 consecutive months of weakness.  Even though it was a step in the right direction, it didn't act as that 'NFP foil" that traders would need to see in order to let their guard down against risk.

All that having been said, and as nice as the little rally was, it didn't get us through the most important line in the sand for long-term bond market strength.  OK, so there is no ONE line that's more important than another, but if we were hearing arguments for various technical levels, the band of yields between 1.84 and 1.86 would certainly be in the running.  This is, after all, what I've referred to on many occasions as the gateway to the 'golden era' of low rates.  Whatever it is, it seems to be a highly charged inflection point--far more likely to turn yields back in the direction they came, be that higher or lower.

This happened again yesterday as yields bounce at 1.855.  Whether or not we get another chance will very likely have to do with the economic data coming out in the remainder of the week.  Today is no slouch in that regard, as we get several moderately important reports in a fairly evenly-spaced cadence throughout the morning.  If there's a highlight, it's Industrial Production at 915am.  Apart from that, there will also be several Fed speakers about.