Consolidation... That's that word we use to refer to sideways and frequently narrower trading ranges that follow a period of more directional movement (you can click on the word to go to a full definition).  Consolidation is the best case scenario right now, when it comes to defining the modest weakness seen yesterday and so far this morning.  In other words, we would hope that we're merely seeing a consolidation of the strong rally of the past 5 weeks as opposed to a reversal.

Would a consolidation be better than a continuation of the rally?  In my mind, yes!  We don't want the rally to progress too far too quickly for a variety of reasons.  As with most things in the natural world, slower and steadier is more sustainable.  

Next week's Fed announcement would be an ideal finish line for such a consolidation.  At that point it would be up to the Fed's economic projections as well as the text of the announcement itself to dictate what happens next.  For now, while bonds have had their first red day of the most recent positive push, they haven't been eager to jump back up toward higher yields.  More risk-averse clients need to keep a close eye on any additional weakness from here (2.88% would be an important ceiling) as it would likely result in the short-term momentum indicator lifting off from 'overbought' levels (the lower blue line in the following chart, with an example of such a liftoff seen in late August).  The risk is that the well-traveled pivot point of 2.82% will once-again act as a firm floor.