Yesterday we noted that it was "almost an insult" to look out on the day ahead in terms of the events on the calendar when tradeflows and technicals had so clearly dominated the recent activity.  The trading that followed would drive that point home in grand fashion with bond markets doing a complete and brutal 'about-face,' heading to WEAKER levels shortly after the lousy Consumer Confidence numbers.  

The reason?  Bond market participants were admittedly as short as they've been since 2011.  They began covering those shorts even before the consumer confidence data, helping the 1.97 ceiling stay intact in 10yr yields.  When the data hit weaker-than-expected, with stocks looking like they'd sell the big miss as well, it prompted another glut of short covering.  

Short-covering tends to act like interference that distorts the bigger picture.  After the shorts were sufficiently washed away, new, bearish tradeflows emerged en masse, taking yields quickly higher, with a perfectly linear trend of "higher lows."  A few minutes of hindsight showed this momentum was clearly aimed at 2.00% technical level, which we noted yesterday as the newly installed wall in the trader's sandbox.  While it held up as a supportive ceiling, it also served to remind us that it (the TECHNICAL level) along with what led up to it (the TRADEFLOWS) were in control.  Go figure...

For better or worse, that changes today, largely because the data says so.  Simply put, the FOMC Announcement has the power to create it's own momentum (or turn away contrary momentum leading up to it).  Even the morning events--ADP Employment and Q2 Final GDP--are dissimilar from Tuesday's Consumer Confidence in that regard.  Long story short, we're looking for more correlation between events and movement today vs yesterday (though to be clear, tradeflows and techs won't be unimportant, simply less dominant, provided the day's events rise to the occasion).