Rates are in the midst of a serious, threatening move higher.  Yesterday brought additional confirmation of the end of the friendly Springtime consolidation trend and it took us one step closer to the highest yields in more than 4 years.  The specific reasons for yesterday's weakness were covered in the MBS Live Huddle, but even then, the bigger-picture justification for gradual weakness in 2018 is well-documented here and elsewhere (Treasury issuance, Fed policy outlook, upside growth/inflation risks).

Rates could very well continue higher today--possibly even enough to break those pesky 4-year highs from back in late February.  But even if they do, it might not be the end of the world.  In fact, there are at least 2 recent examples of big scary rate spikes consolidating (like we did in March) and then re-engaging a selling trend (like we are doing this week) only to have a bigger bounce after yields break above the sell-off's previous highs.  When this happens, it forms a somewhat distinctive "M"--albeit an asymmetrical one.

There are no significant economic reports on the Calendar today, and only a few Fed speakers on the event calendar.  Given that they can't really say much to surprise us at this point, that leaves bonds with the choice of following other markets (European bonds, stocks, oil, etc) or to simply play around in the technical sandbox (i.e. move toward or bounce at one of several technical levels.  We'll talk more about these on MBS Live if they become relevant for today's trading).