Bond markets are beginning the day slightly stronger ahead of the week's only significant economic data. The 8:30am time slot brings Retail Sales (expected at +0.7) and Producer Prices (core year-over-year expected to drop from 1.6 to 1.5). 10am brings the arguably less important Consumer Sentiment, expected at 98.5.
Yesterday's recap provided a fairly thorough assessment of a few competing ideologies regarding the current tone in bond markets. In a nutshell, it said that some analysts were freaked out about yesterday. Others thought it was strong. I was personally a bit indifferent, seeing the afternoon weakness as a logical pull-back after traders bet fairly heavily on another exceptionally strong Treasury auction.
Translating the analysis to bond yields, it adds up to ongoing resistance at 2.34% in 10yr yields. With today beginning RIGHT THERE (seriously, 2.3398% a few minutes before data), the onus appears to be on the economic data to move the needle. After all, the forward path of rates will be dependent on actual growth/inflation being generated, whether by fiscal policies or the forces already in play before the fiscal policies have had a chance to become policy.