After the latest CPI report sent interest rates into the prevailing summer range, we figured we’d have to wait until tomorrow’s Fed day for the next big shoe drop. While this has generally been the case, prices have not been able to stay completely within the range. The closer we get to the same day, the more bullish pressure we see on yields. Overnight trading provided some clues about pre-Fed weakness. The typical relationship between US and EU bonds has broken down in a rather noticeable way with Treasuries weakening while EU bonds rallied. True, neither move was extreme, but the difference is notable because it provides clues to the Treasury’s own concern ahead of the Fed. The ‘concern’ in this context could be as simple as traders exiting long positions they took in the aftermath of the supportive retracement of two weeks ago, or even the mini supportive retracement of last week. There is always the possibility that Treasury auctions could add some undue pressure when they coincide with Fed week.