The market is also awaiting next week's European Central Bank meeting, where it is expected to cut rates and possibly discuss a quantitative easing program though it is not expected to announce QE. "It's been well-priced. You've seen their yields respond," he said.
Randy Frederick, managing director of active trading and derivatives at Charles Schwab, agrees that the ECB has been a factor. "From my perspective, the biggest catalyst for what's going on in the bond market, is what's going on in Europe…On a risk-adjusted basis, it just makes more sense to own American debt than debt of Italy or Greece."
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Traders also blamed the recent move lower in yields on repositioning and the unwinding of a massive short position in the bond market.
"I think everyone that tried to figure out what bond yields were going to do this year has been wrong," Frederick said, adding even if yields have not bottomed, they are not going up fast.
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"You used to be able to count on the bond market going in the opposite direction of the stock market, but that's not the case anymore. The old adage that went back many decades has gone," he said.
Stock market gains could be one factor that trips up the bond market. MacNeil Curry, head of global technical strategy at Bank of America Merrill Lynch, warned bond market bulls to beware in a note Tuesday, even though he says the long end is in a medium-term bull trend. He said the S&P 500 has resumed its uptrend and that gains should continue to the 1923 level or beyond.
"Such a move could be problematic for Treasury bulls, especially in the long end," he wrote. "…Key pivotal support is drawing near," he wrote, noting for the 30-year the year-to-date trendline is 3.454 percent and the Feb. 4 low of 2.568 percent in 10s are the levels to watch.
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As for stocks, Frederick says there's no real catalyst that looks set to disrupt the trend higher but noted that seasonality is worrisome, and it could be a factor.
"The S&P in 2013 lost 1.2 percent between Memorial Day and Labor Day, even in a year that was up 30 percent. If we do lose 1 or 2 percent it would probably be a buying opportunity," he said.
What to Watch
There is no data of note Wednesday, but there are two bond auctions. The Treasury will auction $13 billion in floating rate 2-year notes at 11:30 a.m. ET and $35 billion 5-year notes.
Earnings are expected from Michael Kors, DSW, Toll Brothers, Chic's FAS, Bank of Montreal and Royal Ahold.