The extent to which bond markets will be able to continue building on last week's consolidation will be predicated on this week's data and events.  Whereas last week was generally light in terms of participation (volume and warm bodies), the new week should inspire more.  Right from the outset, economic data is robust through Thursday.  The highlight of the week may be Bernanke's semi-annual testimonies to both the House and the Senate (aka "Humphrey Hawkins" testimony/speeches, so named because Senator Hawkins and Rep Humphrey co-sponsored legislation that mandated a twice-a-year policy report from the FOMC to both the House and Senate.  The reading of the reports and ensuing Q&A were officially Humphrey Hawkins Reports until the legislation mandating them expired, but market participants continue to use the term for the Fed's semi-annual reports).

Monday kicks things off with Retail Sales at 8:30am.  This is a significant report and has created lasting momentum in the past when it's been much higher or lower than expected.  The current consensus is for accelerating sales at +0.8 percent vs a previous reading of +0.6 percent.  The Empire State Manufacturing Survey is out at the same time, but is the lesser of the two reports.  Fed's Tarullo also delivers a speech at 8:30, but on the topic of regulation, so it's not likely to contain any relevant clues for market watchers.  The Business Inventories report rounds out the morning at 10am--not a market mover.

Tuesday continues in the same vein with several significant reports.  For the better part of 3 years, markets have had almost zero concern for inflation data.  It used to be that CPI and PPI (the "price index" reports) would have a noticeable, logical effect on trading levels in bond markets.  But at least since mid 2011 (and arguably even before that), concerns about too little inflation resoundingly trumped concerns about too much.  And "too little" inflation isn't the sort of concern that US traders are accustomed to trading, so markets did nothing with it.  That may be changing now as Fed speakers increasingly suggest defending the inflation target from both above and below.  Granted, the Fed has other policy tools to fight deflation, but asset purchases are seen to be lasting longer if inflation doesn't stay high enough.  Long story short, lower-than-expected CPI stands a better chance to start causing a noticeable reaction in markets, even if not a huge one.  Tuesday morning's data wraps up with Industrial Production at 9:15am and the NAHB Housing Market Index at 10am.

Wednesday kicks off the Bernanke testimonies and the focus will be squarely there on Wednesday.  Before Bernanke gets started at 10am, we'll get MBA's Mortgage Market Index at 7am--offering another chance to gauge the effects of recent interest rate spikes on purchase demand.  Housing Starts/Building Permits for June will then report at 8:30am and both are expected to have risen.

Thursday's morning data isn't overshadowed by the 2nd day of Bernanke testimony.  In the past, we've seen the 2nd day of Humphrey Hawkins have less of an effect than the first day unless a new question elicits a new answer in the Q&A portion.  Otherwise, it's the Chairman reading the same speech and answering mostly the same questions.  That said, the Senate version tends to be more erudite (RELATIVELY!  The bar is not set high by the House).  Whatever the case, Jobless Claims at 8:30 or the Philly Fed Index at 10am can both have an impact.    There's no significant data scheduled for Friday.