Stocks have been getting a boost from Santa, but not bonds.
As bonds sold off, the 10-year yield rose to 2.28 percent Wednesday, a key technical area traders have been watching. Traders await the $29 billion 7-year auction at 11:30 a.m. ET.
"The usual risk-on mood during the holidays may keep some investors away," wrote George Goncalves, head of rate strategy at Nomura. "If we do not see support come out for the auction, there is a risk that rates keep drifting up into year-end as dip buyers might try to optimize entry points at the start of a new calendar year versus now."
The stock market closes at 1 p.m. for the Christmas holiday, while bonds close at 2 p.m.
"The Santa rally already started. It (S&P) moved 5 percent from last Thursday. Maybe it will digest a little bit in the next few days," said Scott Redler, partner with T3Live.com. "With low volume, digestion would be nice because that would reset the market for a potential move above 2,100 when the New Year starts."