Yesterday saw bonds undo a decent amount of overnight progress to end at the highest yields in nearly a month.  10yr Treasuries broke above the 1.75% level.  If they close above 1.75% again today, it would add validity to the weaker trend of the past 2 weeks.  Trade headlines helped at first but Brexit headlines led the reversal.

Bonds will continue sorting out the relative impact of Brexit  anticipation compared to domestic economic data as we get the week's only significant report: Retail Sales.  As frustrating as it may be, we're quickly finding ourselves in a position to give geopolitical events MUCH more sway over market movement than we would have just 2 weeks ago. 

It's frustrating because after the last Fed meeting, the bond market thesis has been something like this: "keep an eye on trade and Brexit, but first and foremost on the next 6 weeks of econ data."  On several occasions, econ data clearly confirmed the thesis (specifically, with the huge reactions to the ISM numbers at the beginning of the month).  Since then, however, trade and geopolitics have taken control, or at least taken a leadership position when it comes to dictating day to day movement.  This is easy to see in the following chart of 10yr yields vs German Bunds and British currency (as a Brexit barometer).