It is looking like we've got Scenario #2 here - a retest of the highs.

The bond market may have turned, at least in the short term - the DMI is finally turning the way. However, until the channel the bond has been in for the last 2-3 weeks is violated, you cannot take this as a sign of a new trendline. That would be around 5.12% today - well below where we are now - but this level will rise each day, so a sideways trade will violate in a few days.

Beware jumping on this Bull. While it looks solid right now, beware that the worm can turn on these deals almost immediately. We've got a "big deal" sitting out there right now in the Bear Stearns hedgie potential blowup (which is NOT being widely reported as of yet) could be the "trigger event" on some true ugliness.

For today, clearly, the trend is up - and the bond appears to be thinking about breaking that uptrend channel.

Scenario #2 makes for some very difficult trading decisions, with really huge losses possible if you get caught on the wrong side when the worm turns. Be wary and be ready; these sorts of rallies have a habit of being bull traps, where you see what looks like a solid reversal (when something secular changes but then pulls back a bit towards where it was) but the secular trend change still exists!

In this case, its global interest rates and borrowing costs - they're higher and that trend is not going away.

I am daytrading a bit here and there, but at present am not committing a lot of money on either side - nothing more than I'm willing to lose......