Friday's action made it seem a little more likely that the rallies from last week would extend and while I thought Wednesday's FOMC meeting could be the source for any fireworks, it was news over the weekend that a peace deal with Iran had been reached which lit the fuse.

Oil futures opened with bullish weekly gaps and are around $5 lower, and treasuries opened 2-4 bps lower, also leaving bullish weekly gaps.

I'd be prepared for just about anything when Wednesday's FOMC Statement is released since it will be the first opportunity for new Fed Chairman Warsh to put his fingerprints on it. He might not and it could prove to just be more of the same, but I'd still be prepared.

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Last week had been rather quiet heading into Thursday, but rallies sparked by talk of a peace deal helped to produce positive weekly closes and after pullbacks early Friday morning, yields on the 5'and 10's began to recover after giving back between 50 and 62% of Thursdays gains, so the short-term charts offered reason to be optimistic heading into the weekend.

Daily oscillators are inconclusive at best, if anything they look more bearish than bullish for the 5-year but more bullish than bearish for the 30-year, and when applied to weekly charts they do reflect oversold conditions although that's not much to go on, especially with important news on the way. With oil now having broken below the trendline that could have defined a bearish triangle.

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On Friday I went over some rally targets, which I think are worth repeating. Without all the gory details, the 5-year has a wave-equality target at 4.067 which is right where it would fill the bearish gap left on 5/12, the 10-year has a wave equality target at 4.299, and the 30-year has a wave-equality target at 4.789 which is right where it would fill the gap on 3/11.

Also in Friday's update, I pointed to 6/18 and 6/24 as dates which represent intriguing timing for reversals from the targets in either the 5-year or the 30-year.

To be perfectly clear, however, I don't think anything that comes out of the Fed, or even Iran, will impact the longer-term patterns, which still suggest to me that significantly higher yields will be seen before strong rallies develop.