The bond market and many other markets are still in the process of retracing the steps they took to price-in the risk of a new war in the Middle East.  Granted, that risk wasn't exactly full blown, but it was clearly in control of pretty much everything on Tuesday night when Iran attacked 2 air bases in Iraq.  The absence of immediate response from the US on Tuesday combined with Trump's speech yesterday to drastically de-escalate the situation (despite ongoing snippets of Iranian rhetoric) and markets have responded accordingly.

Even before the de-escalation, the very best the bond market could do was to make it to levels that were STILL slightly higher in yield than the last prominent low in early December.  In turn, those early December yields were also just a hair higher than the low before that in early November.  Taken together, the 3 valleys form a clear ascending trend, albeit a subtle one.

The net effect is a bond market that remains in a consolidation range--something that's been the case since October--but with a slightly modified lower boundary.  This leaves us in the same waiting game where a clear break of one of the lines carries a risk of additional momentum in the corresponding direction.  In other words, if yields were to move well above 1.95% (say, 1.97% or so), a continuation up above 2% is not unlikely.  Conversely, moving well below the lower yellow line above would have the opposite implication.

Markets have to decide when they are done trading Iran and, from there, remind themselves exactly what they're focused on in the new year.  The end of 2019 was largely about assessing the impact of the trade war on economic data (a tricky prospect given that trade issues suggested economic weakness could be taken with a grain of salt, assuming they'd eventually be worked out).  As for today, there are no significant economic reports.  Even tomorrow's Jobs Report is a bit less relevant than its glorious history would suggest, largely because labor market strength is taken for granted at the moment.  That said, investors would be very interested to see any cracks emerge in the jobs data.