In the day just past, bonds returned from the weekend with an unexpected fervor--at least in terms of outright improvement in yields.  Looking beneath the gains, we saw limited volume and no fundamental justification for the move.  Rather, it was driven by the very same absence of volume which allowed an imbalance of short positions to be exploited in a short squeeze.  The last anticlimactic detail was the fact that MBS noticeably under-performed vs Treasuries.

In the day ahead, bonds will continue to sort out their approach to the first week of July (which we expect will be a big jumping-off-point for the next big leg of momentum in an already momentous year).  There are several economic reports on tap today, but none of them are in the "big-ticket" category in terms of market movement potential.  If there's a chance, it arrives with the 10am data (New Home Sales and Consumer Confidence).

From a technical standpoint, today's charts show two different ways to define the current trend.  If we use daily candlesticks, it's easiest to draw parallel trendlines that highlight this linear downtrend.  Sure, some of the intraday action breaks outside the lines, but opening and closing levels continue falling inside.

Opening and closing levels don't always capture what's important, however.  If we now break the chart into hourly candlesticks we can see a bit of push-back that began after the Fed announcement helped yields hit new long-term lows.

In either case, the upper yellow line is about the same and can be watched as an early warning sign of a negative shift.  Notably, the consolidation pattern runs out of room a bit before the full week of important data is complete in early July.  As such, I'd expect these consolidation lines to get a bit flatter some time this week.