• The recent downtrend is broken
• The slightly broader sideways range is now close to being broken
• Retail Sales may decide the fate of the range
• 10yr auction at 1pm also a potential market mover

Bond markets have decidedly shifted from 'flying high' to 'under pressure.'  A fairly linear downtrend had been intact since mid-March, and it was broken rather convincingly yesterday.  That's not necessarily the end of the world if bond markets can manage to hold a slightly longer-term sideways trend stretching back to February.  

As you can see in the following chart, the sideways trend's first major line of defense is 1.80.  Not pictured in the chart is the even more important 1.84/1.85 boundary, which is where we would absolutely need to see support in the event of another big sell-off.

As to the likelihood of such a sell-off, it's doubtful that Retail Sales alone could bring about that much weakness, but it will be the biggest potential market mover this morning.  The afternoon brings the 10yr Treasury auction.  In general, auctions haven't been moving markets as much as they used to, but they tend to have at least a noticeable impact during transitional phases.  In other words, if bonds are in the process of transitioning out of a recent trend, the auction provides one more piece of data to inform the pace of that change.