Will the Fed raise rates?  Is economic data sliding?  Are stocks and bonds more interested in trading the rate hike or the data?  All of these were fair questions yesterday and all could be argued either way.

There is a camp that firmly believes the Fed is dead set on hiking rates in 2015, no matter what.  They believe that even though the Fed says they're taking a data-dependent approach, that the committee is somehow ideologically pre-committed to hiking this year.  I've been to this camp.  It's not a bad camp, and not necessarily wrong.

The other camp thinks there's no way the Fed can hike with inflation persistently failing to launch, with GDP leading off the year potentially close to 0.0, and with a strengthening dollar meeting head-on with a plummeting Euro and ECB Quantitative Easing.  This, too, is not a bad camp.  I've spent some time here as well.

Frankly, both of these camps are solid.  And that's the problem.  There's a great case to be made for the Fed holding off on hikes due to the fundamental facts in the marketplace, and there's a great case to be made for the opposite due to some of the crazy things Fed speakers have said.  If that weren't bad enough, we even have some Fed speakers carrying the banner for one camp, will other Fed speakers carry the banner for the other camp.

Atlanta Fed President Dennis Lockhart is a pragmatist.  He could blend in to either camp.  It was notable then that he came out in fairly strong support of a 2015 rate hike yesterday.  The timing of yesterday's move makes it hard to know for sure, but it looked like markets felt it was notable as well, considering that stocks and bonds did another rendition of their "accommodation off" trading pattern, where both sides of the market sell (stock prices down, bond yields up).

But as the questions marks in the chart imply, it wasn't necessarily Lockhart.  It's possible that the Treasury selling was less directly correlated with stock selling this time around.  Stocks might be considering weaker data prospects as well.  Because Durable Goods isn't exactly a hot topic for the Fed, there's no reason to reprice rate hike expectations because of it.  Then an hour later if you have Lockhart saying the Fed will probably hike by September, it's a double whammy of negativity for equities. 

Bonds, on the other hand, may have just found the limit of the recent rally move.  The fact that they were unable to extend gains after Durable Goods made that ominous suggestion early.  Lockhart and the lousy 5yr auction confirmed it.  Tradeflow momentum did the rest.  This feels like a pretty good take on the action.  It would rely on there being a technical case for resistance in the 1.86 neighborhood, and there certainly is.  Not only is this where 10yr yields bottomed out on that crazy October 15th session, but it's also the lower bound of the long term trend. 

While the long term trend has been broken and tested at times, it's still a relevant guidepost, especially with yields just bouncing on the upper end of the channel 2 weeks ago.  In another ominous sign, if we are bouncing here at the lower end of the long term trend, there's nothing but room between here and 2.20. 

Here's the saving grace, if there is to be one: the lines I've placed on these charts could end up to be completely meaningless.  Sure, the short term technical studies are turning, but they haven't confirmed their bounces yet.  Even if they do, there's certainly no hard and fast rule that says they have to carry the selling through to the other end of the trend.  True, there is some cause for concern here, but it's equally true that we're nowhere near the point of abandoning hope.