• Bond markets threatened to bounce weaker yesterday
• concern was that new month tradeflows were just the start of more selling
• hope was that it was just profit-taking on month-end bets
• Technicals now looking good again
• hoping technicals still look good at close; no econ data on tap

Bond markets had a challenging day to kick off the new month yesterday.  That was a bit disconcerting considering the possibility that the weakness was driven by a shift in trading momentum that is sometimes seen at the beginning of a new month (when the previous month ends with noticeable momentum in the opposite direction).

Our hope had been that yesterday's weakness was merely a 'cleansing' of the opportunistic trading that also can accompany month-end momentum.  In other words, some traders MUST make certain trades heading into month-end.  Other traders can do whatever they want, and they take the month-end opportunity to buy bonds with leverage, betting that the compulsory month-end trading will help markets move in a profitable direction.  Once those profits are in, the opportunistic crowd cashes out.

This quick "get in, get out" type of trading accounted for some of yesterday's weakness.  We couldn't know exactly how much until today.  In retrospect, it probably accounted for most of the weakness.  Otherwise, today wouldn't be as strong as it is.

Speaking of today's strength, we're starting the session with levels that would confirm the positive technical movement seen at the end of last month.  All we really need to do is avoid losing to much ground and bullish bond market momentum will be firmly intact.