Today begins with a modestly weaker CPI (consumer price index) report generating an impressive surge in volume.  In fact, the volume in the minute following the CPI release was roughly double that seen in the minute following the last NFP report.  This reinforces what we've been discussing with respect to CPI taking the reigns from NFP as the most important piece of econ data for bond markets on any given month.  This only becomes clearer when we consider the last time a minute of volume was as big was also due to a CPI report.

While volume is nice, and while the rally is nice, there's one big, ongoing problem, and it looks like this:

Bottom line: bonds continue struggling to break below the 2.95% technical barrier.  Even after this morning's CPI data, the best bonds could manage was a brief visit to 2.9476%.  Now, it's entirely possible that bond buyers are able to muster the strength to make another rally attempt, but all we have for now is a decent CPI number (decent for bonds, in that it was slightly weaker than expected) helping duel a moderate rally, but NOT helping to break key technical levels.

The only other major event on tap for today is the 30yr bond auction at 1pm  In and of itself, this doesn't pack nearly the same punch as the 10yr Treasury auction yesterday--let alone this morning's CPI.  BUT, the 30yr auction can still be an important mile marker for bond momentum because it marks the end of the week's official Treasury supply.  Regardless of the strength of the results, we often see a small shift in momentum when the auction cycle ends.