Bonds trading sloppy...

For the past few days, Treasury bonds have been trading sloppy. I'd attribute it to slightly stronger-than-expected U.S. economic data, rising yields overseas, and the news that China is starting to diversify its reserves and allowing its currency, the yuan, to appreciate at a faster rate. Those moves could reduce demand for U.S. bonds.

Technically speaking, we're approaching what I would call a critical support zone in the Long Bond futures. Let's call it 109 16/32 to 110. Ten-year note yields are testing 4.8%, an area of key resistance. If we eclipse that level -- and then take out 4.9% -- it could be "look out above" time for interest rates.