How can you avoid reading this prose when the headline is so gripping? Slow trading! Sideways grind! Lack of obvious near-term inspiration! If we’re on the edge of our seats, it’s only because we’re working on our posture. Of course the market can legitimately surprise us at any time, but the baseline for the first half of the week is ongoing consolidation (i.e. a mostly sideways “leveling-off”) of 2021’s initial rate spike.
The consolidative vibes were in doubt as of last Thursday morning, when it looked like bonds might try to take a stronger tone. Since Thursday afternoon, however, yields have moved back into the previous range in fairly linear fashion. 1.58+ and 1.62+ are the 2 main resistance/floor levels for the range.
There’s still a shot at glory though! Reason being: the more aggressive downwardly sloped correction (white lines below) is still technically intact. While I think it’s more likely that yields either drift up and out of this pattern, there’s always a chance bonds find some unforeseen motivation to remain bullish (but truly, it would be unforeseen).
There are no major scheduled events on tap today. Corporate earnings continue ramping up, but earnings season won’t be in full swing until next week. Even then, the correlation between stocks and bonds has been erratic recently.
We continue waiting on the 2nd half of the week for more guidance, with a 20yr Treasury auction tomorrow and the ECB announcement on Thursday morning.