Last week saw a potentially significant development for bond markets with the break below key technical levels in 10yr yields and the yield curve.  For 10's, the key level had been (and still is) 2.80%.  Whereas it had been acting as a persistent floor throughout March, yields finally conquered it last Wednesday and spent the next two days trading below it.

The only risk/reservation had to do with the confluence of temporary events that might have resulted in a push back in the other direction this morning.  Those events included the month-end trading environment and position-squaring ahead of a long weekend.  In this case, the position-squaring took the form of short-covering (traders buying bonds to close out--or "square"--bets on yields moving higher--aka "shorts").

Indeed, the week is starting out with a slightly weaker bias in Treasuries, but we can tolerate a certain amount of selling without the hopes for a new narrative being dashed.  Last week's rally is essentially being tested/vetted, and as long as yields defend the 2.80% pivot point, the new narrative still has a chance.

Now... there's "surviving" and then there's "thriving."  While holding under 2.80% is tantamount to survival, it would certainly be a more compelling victory for the narrative if 10's can break last week's floor of 2.74%.  Some of this week's economic data could actually inform that decision.  After all, the narrative in question relies on gathering evidence that bond issuance, the Fed rate hike trajectory, economic growth, and inflation won't surge relentlessly higher in 2018.  Any signs of trouble in either of the ISM reports or the NFP data could help.