While the notion that "all good things come to an end" is the subject of philosophical debate, it's a safe bet that all awesome bond rallies will eventually meet resistance.  For the first time in the entire month of March, the bond market is exhibiting some weakness that's worth mentioning.  Until now, the worst thing you could say about this month was that rates were only holding sideways for a few days here and there in between strong moves lower.  

While that certainly makes today's weakness more palatable in the bigger picture, we're always most concerned with the future, aren't we!  Rates are still near long-term lows and are still much lower than they were even 2 weeks ago?  Good for them!  How about next week?!

Prediction is a fool's errand most of the time when it comes to markets.  Sweeping generalizations can pan out, but even those often involve ifs and thens (case in point: I said earlier this month that if the Fed unveiled a detailed plan to stop its balance sheet runoff on March 20 that bonds would rally significantly) or the prediction has a binary outcome (i.e. I've said for months that March 20th would likely see a bigger break higher or lower).

At present, we're not waiting for any big revelations like those surrounding the Fed announcement last week.  There is economic data next week, I suppose, but it remains to be seen just how big an impact it might have.  I could still envision a scenario (2, actually) where investors remain cautious on bonds despite weak data or where investors remain cautious on the global economy despite strong data.

So what do we do from a strategy standpoint?  There are two mindsets, or two levels to any investment approach: strategic and tactical.  Strategy connotes longer-term, bigger-picture considerations.  Tactics connotes shorter-term, opportunistic considerations. 

Strategically, we're in great shape, and only really threatened by a surprisingly resilient global economy.  It's just as possible that the global economy exhibits something other than resilience and that rates would continue to fall in the longer-term.

Tactically, however, we just had a bit of a perfect storm for bonds, beginning with the 2019 consolidation.  The surprisingly aggressive Fed and surprisingly weak EU data presented a clear case for a big breakout rally.  If investors think that rally has run its course from a tactical standpoint, there's a possibility of a deeper correction next week.  

Sadly, there's probably not going to be anything we can witness today that will give us better than a 50/50 chance of guessing next week's direction.  There are two camps, to be sure.  One side sees the rally as overdone and in need of a correction.  The other side sees opportunity to take advantage of the first side's conviction. 

But if there is something to witness, it may well be how bonds behave around various technical levels that have proven to be relevant on multiple occasions.  Most immediately, there's 2.43%, which is trying its best to act as a ceiling today. 

Beyond that, it still wouldn't be the end of the world to see a run back up to 2.47% or even 2.55%.  I know it would feel like the end of the world to some, but remember where 2.55 sits in the bigger picture.  A big ceiling bounce there would actually do more than anything to confirm a large-scale shift into a new, lower range.  Breaking above 2.43% keeps the door open for that sort of slightly bigger correction.  The takeaway is that we're at risk of needing to be tactically more defensive today and next week.