In the day just past, bonds rallied profusely on news that Italy would defy EU budget rules in laying out expenditures to stimulate its economy, thus introducing systemic risk to the Euro currency which, in turn, benefits core bond markets like German Bunds and US Treasuries.  10yr yields moved from 2.41 to 2.37% before the start of business and then rallied more on weak Retail Sales and manufacturing data.

In the day ahead, bonds will be looking around, wondering if the coast is clear for some much-needed selling pressure.  why much needed?  Simply put, just as Italy defied the EU, bond market momentum has defied expectations and conventional wisdom by continuing to move lower in yield, despite several logical opportunities for a bounce or correction.  Yesterday might have brought such a bounce if the Italy news never happened and if economic data was closer to consensus.

Today's data isn't quite on the same level as yesterday's, but various 830am market movers could still combine to produce a reaction.  Chief among these is the Philly Fed index, currently expected to rise from 8.5 to 9.0.  Jobless Claims and New Residential Construction round out the early time slot.