The last trading day of the month for bond markets is more interesting than average in its own right.  Money managers are busy making sure their holdings match certain indices.  For bond market participants, that's typically some flavor of Barclay's index.  There's no secret place where month-end "index buying" is reported or tracked, so onlookers are left to rely on secondhand reports or simply deduce based on trading activity.

To that end, both deduction and secondhand reports suggest we've seen a fair amount of month-end buying come through already over the past two days.  But we also probably haven't seen the last of it.  Yesterday's trading set us up for a nice potential line in the sand to watch for it today.

This came in the form of a simple pivot point between 1.78 and 1.79 in 10yr yields.  That's as low as yields went before the Fed on Wednesday and that's as high as they went on Thursday.  At the same time as Thursday's bounce, there was clear evidence of month-end dip-buying.  In other words, buyers were waiting for an opportunity and crossing over 1.78 was the cue.

Assuming we make it though the overnight session and morning data with yields still under 1.78, we can lean on it as a potential trigger for more support.  If yields break higher  with little regard for the technical level, it wouldn't bode well for the rest of the day.

Data is worth mentioning as a wild card today because there's a lot of it.  Europe has several important reports, including German Retail Sales, French Consumer Spending, Spanish CPI and GDP, Italian Unemployment, and Eurozone CPI and Unemployment.  That gives Small World a run for its money, both in terms of countries represented and potential for disconcerting impressions.   In our case, disconcerting would be good for rates.

Then there's US GDP and Employment Costs at 830am ET followed by Chicago PMI at 945am.  Given the current state of (il)liquidity, the prospects for month-end trading begin diminishing rapidly after lunch time.  No joke.  That simply means that if we find ourselves on the ropes, it would be easier to fight back in the morning hours.