As stock markets open down about 0.25%, bond are off the the races this morning, with the 10yr note dropping 10bps and MBS 4.0's gaining a full point from the open (+0-18 over yesterday's close). 

Both are beginning to show signs of a consolidation and continuance pattern where prices or yields that have recently made a big move stop to form a triangle, consolidate, and continue on.  This is known as a "pennant" (if triangular) or a "flag" (if the consolidation range has parallel extremes).  I tend to call both of them "flags" because, frankly, it's easier to say that the market is "flagging" as opposed to "pennanting." 

Either way, same concept in both cases: market rallies or sells directionally, graph consolidates sideways in a static or narrowing range, and that's about it.

PLEASE hear me say that the mere existence of these terms is never a guarantee of the remaining direction of trading.  We're in a "so far, so good" situation where technical signals thus far suggest a slightly higher probability of these gains holding vs eroding in the immediate future.  The pennants should be watched just like any other triangle, where a bearish breakout would be cause for concern that yields have moved as low as they may go for today.