Yesterday brought moderate weakness for the bond market.  Justifying it doesn't have to be any more complicated than technical resistance combined with an absence of buying demand ahead of the afternoon's 10yr Treasury auction.  Yields rose enough for the auction to come in with decent stats, which helped bonds stabilize.  The Fed meeting minutes fell on deaf ears for 2 reasons: they didn't say anything that couldn't already have been gleaned from the announcement, and Powell's speech from the previous day already laid out the relevant considerations for the Fed in detail.

Today brings the consumer price index (already out, here's the MBS Live update) as well as the conclusion of the week's Treasury auction cycle.  CPI would have been the week's most relevant economic data had Powell not spoken so explicitly about the Fed's symmetric inflation targeting (i.e. they want core inflation over 2% by a big enough amount and for long enough to offset the time that it was under 2% during the past decade.  Specifically, I think the Fed is looking at 2013-2017 period where core CPI reliably hit 1.6% and saying that 2.4% is no big deal because of that.

With the week's only major economic report being robbed of its typical significance, traders have little else to do but play games.  One familiar and logical game is "React To The Trade Headline" where traders sell first and ask questions later in the event of a positive update on trade and vice versa for trade deal headwinds.  Then there's the "Sell Before The Auction" game where traders leave themselves in a better position to bid at today's 30yr bond auction by selling bonds this morning (or at least by not buying them).  Finally, there's the "Wouldn't You Like to Know" game where the bond market moves for reasons that can't readily be associated with any obvious, quantifiable market developments.

In fact, the "Sell Before The Auction" game is a variant of the "Wouldn't You Like to Know" game, but the latter can get much more complex than that.  It can also be strikingly less complex.  For instance, some traders may simply choose to follow an emerging trend channel in the longer end of the yield curve.  (Note, this chart was snapped before today's selling momentum at 8:40am.  Yields have since moved almost perfectly to the upper line).