• Bonds have been sideways to slightly weaker since last week's FOMC Minutes
• Markets not only coming to terms with increased June/July rate hike odds, but Fed is spelling it out
• Auction pressure and corporate bond issuance didn't help
• Higher stocks and oil didn't help
• Yields were close to unchanged, but still near higher end of recent range

Things are starting to look pretty tenuous for bond markets.  We can't seem to muster the strength to battle back into the territory we gave up with last week's FOMC Minutes, and that's not reassuring considering the time of month.  Month-end is traditionally a more supportive time for bond markets--one where we often benefit from the extra bond buying money managers are forced to do, in order to bring their portfolios in line with certain benchmarks.

For instance, if a particular pension fund says that it holds x% in US Treasuries based on a certain index, the traders who manage that money have to buy and sell Treasuries to bring their portfolio in line with the changes in that index.  The most widely-used index is expressed in "duration"--aka the average amount of time that interest payments remain on a bond portfolio.  Because bonds are always one month closer to being paid off with each passing month, the index duration must be "extended" if it is to maintain a constant level of future payments.  In other words, traders have to buy bonds so their portfolio always has x years of interest payments remaining.  

All that to say that this month's indices mandated a bit of a bigger extension than average.  that lets us know that there have been and will be quite a few traders who have to buy bonds.  This is notable because we're not managing to gain any traction even with that help.  If the next 2 days bring data that strengthens the Fed's case for a June/July rate hike, and if month-end bond buyers get their fill before next Tuesday, we could see the remaining market participants push rates up and out of 2016's consolidative range.  Not cool!