The Day Ahead: Running Out of Time to Rally

Even with backs already up against a wall, bond markets still managed to find a way to be weaker on Tuesday.  Perhaps this means we need to adjust our notion of what "high" means in terms of rates/yields.  Who says 2.9-3.0% is a "back against the wall" level anyway?  

Even if it's not a "back against the wall" level, it's relationship to the trading levels that preceded it, is similar to that of July 10th.  You'll see these two dates in the teal circles below.  From there, note their placement inside the white circles--included simply to show the similarity of the surrounding activity--as well as the relationship to the Bollinger Bands (orange lines). 

There's no earth-shattering conclusion here other than Treasuries being out of time.  If they're going to start the same sort of post-sell-off consolidation seen in July, they'll need to start now-ish.  This will be made challenging by today's 10yr Auction, though perhaps the profoundness of that challenge was part of yesterday's weakness?  We can only hope.  If we get more weakness,  the onus will soon be on Retail Sales on Friday to be excessively negative in order to stem the losses before next week's fairly epic FOMC Announcement.  It would also mean another challenge for the already messy long term range in production MBS.