10yr Auction Last Hurdle Before Thursday's CPI

Today is shaping up to be much less interesting than yesterday.  Bonds didn't move nearly as much in the overnight session and began the day in roughly unchanged territory.  There have been modest gains early, but the fact that they were driven by the opening bell of the NYSE suggests they were tied to random tradeflows and positioning rather than reactions to data/events.  Today's only notable calendar item is the 10yr Treasury auction at 1pm ET.  

With 10yr supply looming and yesterday's 3yr auction being strong, it's interesting to see 10's outperforming shorter term notes so far this morning.

We'd normally be less surprised to see some weakness in 10s ahead of a 10yr auction, but as always, if such a thing is so normal to expect, markets would do their best to adapt ahead of time.  Perhaps this sentiment ("sell 10s defensively ahead of a higher auction amount") was indeed a key driver of last week's weakness and we're simply seeing some normalization now.  This wouldn't be the craziest idea in the world given the rapid steepening of the curve over the past few weeks and the apparent resistance forming around -75bps.

Bottom line: if today's 10yr auction still manages strong stats without needing to undergo any additional pre-auction selling, it would offer additional validation for the thesis that this leg of 10yr selling has run its course.  From there, it would be up to inflation data to help 2s fall faster than 10s, thus allowing for additional steepening but without the "bear" designation.