Treasuries were modestly weaker today, while MBS outperformed by holding mostly steady.  That keeps the bond market well within its recent range as well as the longer-term consolidation trend (intact since mid-October).  Upward pressure on yields associated with new "supply" (Treasury auctions and corporate bonds), technical resistance, and improved US/China trade tensions is being offset by downward pressure driven by uncertainty over the next major development in the Middle East.

A widely-followed survey of bond trader positions suggests the highest level of neutrality since the beginning of 2019 and some of the metrics are the most neutral since mid-2017.  This is more a reflection of what we already know than some sort of revelation.  A lot is up for grabs at this stage of the economic cycle with 10yr yields under 2%, progress on a trade deal, a Federal Reserve that's said it isn't planning on doing anything with rates for a while, and inbound economic data that must be taken with a grain of salt due to (potentially temporary) trade-related influences.  And that was all in play BEFORE last week's drone strike news.

Tomorrow brings the sometimes important ADP Employment Report and the 10yr Treasury auction.  Bond yields are at risk of stalling out after the unexpectedly strong move last week.  10yr yields around 1.85% mark an important technical zone/ceiling.