“We are grinding slightly higher in yields as the 10-year note auction, and the setup for it, will be the main driver of the market,” Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia, said in a telephone interview. “Retail sales were strong, but we will continue to be stuck around these levels, reflecting low inflation and the slow economic growth trends that are firmly in place, until something changes.”

Eoin Treacy's view Quantitative easing was justified on the basis that deflation is a more troubling concern than inflation and that such extreme measures were necessary in order to avoid an economic depression. Ultra low yields serve the dual purpose of lowering the government's borrowing cost and encouraging investment elsewhere through negative real interest rates. While some have argued that this situation has to persist because the economy is now addicted to low interest rates, recent market activity would suggest otherwise. The rather hawkish minutes from the Fed's last meeting raise the possibility that extreme monetary measures could start to be unwound this year. Investors appear to be anticipating this move and have begun to redeploy capital to equities and shorter duration debt instruments.

The US 10-year yield has held a progression of higher reaction lows since November and this sequence would need to be broken in order to question medium-term scope for additional upside.

The Eurozone 10-year yield has been consolidating in the region of the upper side of its six-month range and a sustained move below 1.6% would be required to question potential for additional selling pressure.

UK 10-year yields have posted a step sequence uptrend since the summer and broke successfully above 2% in the first week of January. A sustained move below that level would be required to question medium-term scope for continued expansion. The UK has made no secret of its intention to inflate its way out of the current situation. As yields rise the cost of funding the government's deficit could act as an additional headwind to the Pound.

Swiss 10-year yields have doubled from 0.38% to 0.8% since hitting a medium-term low in December and a sustained move below the 200-day MA, currently near 0.65% would be required to question medium-term scope for additional upside.

The Canadian 10-year yield has been consolidating in the region of 2% since late January and a clear downward dynamic would be required to question medium-term scope for additional selling pressure.

The Australian 10-year yield has held a progression of higher reaction lows since July and broke above 3.5% two weeks ago. A sustained move below 3.25% would be required to question medium-term supply dominance.

Of all the major government bond yields, the Japanese 10-year has been steadiest and remains within a range. A sustained move above 0.8% would confirm a return to medium-term supply dominance.

The commonality across the majority of the above government bond yields above highlights the more ambivalent tone towards the sector which has been evident of late.