In the day just passed, bonds started out strong with help from exceptionally weak economic data in Europe.  German manufacturing, in particular, continues to plumb the lowest depths since the European crisis in 2012.  We're also seeing signs of manufacturing weakness spilling over into the services sector, both at home and abroad.  In fact, it was the Markit Services PMI data that came out weaker-than-expected in the US yesterday while the manufacturing numbers slightly outpaced expectations.  With weak manufacturing being generally assumed, the market was more willing to react to the miss in the Services PMI.  Gains were short-lived as traders methodically pushed yields up to negative territory by the close.

In the day ahead, we can choose to focus on the nitty gritty, short term market movement or instead take a step back and consider how it fits in with the bigger picture.  The latter is a good option right now as the upcoming economic data and events will amount to a vote to maintain or abandon 2019's prevailing trend.  

The trend in question can be seen in the parallel lines (aka a "trend channel") in the chart below.  In the context of that trend, the past few weeks make more sense.  Relative to the trend, August was a bit of an aberration (albeit, a delightful one).  September merely provided a quick return to the trend, but didn't do anything to challenge it.  

There's never any guarantee that such trend channels will continue to provide support and resistance for rates.  All we know is that it's generally been intact during this rally.  To some, that means there's a slight suggest of resistance as yields approach the lower boundary again.  Either way, a break above the upper line would be clear evidence of a negative momentum shift.  Incidentally, if such a thing were to happen this week (and it probably won't...) it would coincide with the most serious overhead pivot point we've discussed recently (1.90%).  

Today's Consumer Confidence data is the only moderately significant report.  It's propensity to cause a reaction exists, but is not guaranteed.  The Treasury auction cycle is in the same boat and it begins for the week at 1pm today with 2yr Notes.  Of the 3 coupon auctions, this is the least relevant.  Tomorrow's 5yr notes will be the highlight, if we're to see any meaningful reaction to Treasury supply.