Bond markets will close early this Friday and will remain fully closed next Monday for the Memorial Day holiday.  3.5-day weekends can often see a shift in trading patterns as investors account for an extra uncertainty due to an extra day and a half of untradeable weekend time.  That can still be the case, to some extent, but markets are arguably already settling into a constant state of "accounting for uncertainty."

In the short term, bonds have to consider the prospect of any significant shift in the coronavirus narrative.  In the longer term, uncertainty surrounds the timing and nature of the economic recovery.  Given that outlook, there hasn't been much of a reason to go anywhere quickly.  The biggest inspirations have been related to new debt supply and the age-old custom of following a along with stocks.

In the shorter-term, stocks and bonds have been quite well connected at times.

In the longer term, the connection isn't as clear, but the two are nonetheless in the same boat with respect to leveling-off and trading a sideways range.

This is a relatively narrow range for bond yields, but it still leaves plenty of room for movement in either direction.  There are a few ways to approach it in terms of an indicator for trading momentum.  If we view it as a flat range, the best case to be made for a floor is at 0.58% (teal line below).  If we view it as an ascending trend channel, the yellow lines are the best candidates.  Either way, the 2nd half of last week implies a resistance/floor bounce.  Today's early weakness helps solidify that case.

Bottom line: bonds begin the week in a defensive stance, and we should defend against a run back up to last week's yield highs in the mid 0.7's until and unless a big, friendly bounce tries to change our minds.