When I think back to 2012--the last time that global financial markets were battling back from European systemic risk drama--I remember feeling less anxious about the whole thing because our own Fed had not yet broached the subject of pulling back on asset purchases or accommodative policy.  Just when it looked like Treasuries had perhaps put in their all time low yields after July, the Fed announced QE3 in September, ushering in the lowest-ever mortgage rates.

Some chilling realities remain from 2012 though--at least for the US.  With 10yr yields bouncing in the 1.6's this year vs 1.3's back then, we've put in a long term 'higher low.'  The big risk has been and continues to be that we've turned the long term corner and will continue to put in long term higher lows.  Compounding that risk is the fact that April may have been the similar all-time low bounce in European bond markets. 

Does it matter if Greece defaults?  No, not when it comes to that long term bounce potential in Europe.  Greece could play out in the most negative possible way and still not prompt a big enough drop in German Bund yields to revisit February's lows.  Does it matter if Greece defaults in a less consequential general sense?  Certainly.  It is indeed worth some gains or losses in core bond markets, but it's not the defining issue of our time.

Markets are more concerned about trading the potential long term bounces in European and US debt.  With that in mind, here are the trends and the inflection point with which we need to be concerned.  Even if yields can break the inflection point (scary pivot) or the shorter term uptrend, it will be another matter of business to break the longer term uptrend.  We'll cross that bridge if we come to it though.  For now, we continue to play defense--especially considering that technical momentum indicators decidedly shifted toward higher rates yesterday.  Such signals aren't guarantees of further weakness, but they do create more risk than average.

Today's calendar is packed by the time you consider all the European data that will be out by the time you read this.  All of the manufacturing and non-manufacturing indices (PMI's) are out overnight.  The domestic session brings Durable Goods and New Home Sales--no slouches.  Then, of course, there's headline potential out of Greece (again... A market mover, but not THE ONLY market mover).