The Fed is yet to come this week and that could be the first good opportunity for bonds to decide on their next move from the past few days of consolidation.  Actually, yesterday's closing levels were fairly close to those seen on May 6th (2.23-2.24), and bonds have traded roughly the same distance in either direction since then (2.11-2.36).  So arguably, the consolidation has been going on for that long.

During that time, several key levels have been better-traveled than others.  Although we have indeed seen lows that approach 2.10, it's 2.14 that has done the most to step in as a lower bound.  This served as the jumping off point for yesterday's sell-off which didn't run it's course until hitting 2.24, another key pivot in May.  From there, the next defensive ceiling is at 2.28 which was last Monday's intraday high and May 13th's dramatic closing level (highest of the year).

All that to say that we're still consolidating despite yesterday's abrupt weakness.  In fact, if we consider the low volume and heavy corporate issuance, to merely have moved back to the middle of this consolidative range is not too shabby.  True, it would have been much nicer to be moving in the other direction, but that may not be possible until we hear from the Fed on Wednesday, and possibly even until we hear from Yellen herself on Friday.

In the meantime, we have the likes of Housing Starts data to keep us company today.  Compared to the things that have actually been driving trade recently, this report would have to be wildly higher or lower than the fairly even-keeled forecasts to get much credit.  Otherwise, we'll continue at the whim of corporate issuance and tradeflow snowballs.