The October Fed meeting is still more than a week away, but it already looks like bond markets are preparing for it.  Preparation for big events often takes the form of 'consolidation'--an increasingly narrow trading range, or at least a sideways trading range that respects its upper and lower boundaries. 

In the current case, using 10yr yields as an example, we have the August lows setting the lower range boundary and the predominant September low (remember those several weeks of narrow, sideways movement between 2.23 and 2.13?) setting the upper end of the range.  The latter was hit a week ago today and now we're perfectly in between the two.  Incidentally, the upper boundary is also the 62% retracement level from the June/July highs (technicians are most fond of the 62 and 23% levels when it comes to Fibonacci retracements).

The fact that October's bounces have coincided with traditional retracement levels gives us one more reason to pay attention to the technical picture--or at least to keep an eye out for breaks of the lines in the chart above.

In yet another sign that bonds are committed to walking their own path of preparation for the end of the month, they're finally making a noticeable divergence from equities markets.  The flatness in Treasuries in the following chart suggests the divergence is indeed more to do with bond markets' unwillingness to sell-off any further from Wednesday's low yields.  Naturally, that means that 2.03-2.04 is an important level to watch as a supportive ceiling today.  While it would be bad if it was broken convincingly, 2.13 would be the bigger deal.

Today's calendar brings only Industrial Production and Consumer Sentiment in terms of econ data.  Of the two, Industrial Production is the bigger market mover, but it would have to make quite a break from consensus in order to tell us anything we don't already know about the flagging manufacturing sector.