Fighting to Hold Friday's Recovery

The end of last week was a wild little emotional roller coaster for the bond market.  Thursday brought a sharp sell-off that spilled into the overnight session with little by way of provocation.  Then on Friday morning, traders quickly began pricing in a slightly softer Fed after a WSJ article hinted at a 'pivot' (a shift from the Fed's cycle of large rate hikes to a flat policy rate).  Gains continued overnight to start the new week, but US traders pushed back in early trading.  Most recently, weaker PMI data is pushing back against the push-back (i.e. bonds are fighting to stay green after some initial selling pressure).

The volatility may seem a bit random at times, but there's a fairly clear connection with Fed Funds Futures.

The peaks and valleys seen over the past two weeks suggest a few rally targets for 10s.  These aren't predictions, simply a few milestones that would be more meaningful than any other random drop in yield.