The Day Ahead: Past Few Sessions Offered Clues About Technical Levels

Tuesday is the lightest day of the week in terms of scheduled data without only Import/Export prices in the 8:30am time slot.  This report tends to not have an effect on bond market trading, and in fact, inflation reports have been a downright lousy indicator of bond market trading since QE's and were only ever marginally correlative at best.  Here's a long term chart of year over year core CPI and PPI vs 10yr yields.

While there's certainly a general correlation between CPU and Treasuries over the 25 years of this chart, it's not the first place we'd look for guidance on any given trading day.  As such, there's no reason to be too keen on import/export prices this morning.  That leaves bond markets to find most of their inspiration from any worthy headlines, tradeflows and technicals.  With respect to the latter, the past few trading sessions have offered some near term clues--lines in the sand if you will--for both Treasuries and MBS.  The longer any of these lines remains unbroken, the more significant a statement it makes when it breaks about potential shifts in trend or range.