Yesterday's most notable accomplishment for the bond market was the breakout of the prevailing consolidation range (aka "pennant," to use a technical term).  We might have hesitated to read anything into this had it not been for elevated volume and the fact that it was data-driven (Consumer Price Index).  We still might hesitate to read too much into it considering next week's Fed announcement stands the best chance of setting the tone in the medium term, but for now, it's fair to consider whether we're seeing evidence that bonds can maintain more of a sideways range as opposed to the previous "sideways-to-slightly-weaker" momentum.

Bonds are under a bit of pressure to start the day.  After hitting 1.260% lows early in the domestic session, 10yr yields are up near the 1.30% technical level.  MBS are outperforming--likely due to the Treasury-specific price pressures (EU bond market weakness and corporate issuance).  Case in point, here's the relative 2-day move in German Bunds vs 10yr US yields.