Bonds Keep Fading; Cue The CPI Anxiety

Bonds Keep Fading; Cue The CPI Anxiety

This morning’s commentary headline was “if bonds aren’t rallying, they’re selling.”  It could just as easily have been the recap.  In general, the entire week was defined by capitulation as traders came to terms with last week’s jobs report and the Fed’s persistent messaging.  While it’s true that today’s inflation expectation component of the Consumer Sentiment data may have greased the skids for more weakness, it probably didn’t have a material impact on where we ended up on the week.  The several failed attempts to close below 3.62% in 10yr yields meant that we’d need an unexpectedly friendly CPI report next Tuesday to restore the range.  That said, bonds seem more content to worry about unexpectedly unfriendly data until it can be ruled out.