If nothing else, this morning offers confirmation of just how nervous the market is about inflation. The producer price index barely beat its forecast (in fact y/y CORE PPI was on the screws), but this was enough for bonds to add on to modest overnight gains in a modestly enthusiastic way. We almost never see this much of a reaction to this small of a beat/miss in PPI. The other consideration is that oil has been trending lower since 3am, and bonds stayed almost perfectly flat from 4am-8:30am, but this should only be viewed as a small supporting actor in this morning's rally. Stocks jumped at 9:30am as well, arguably adding evidence that retail stock investors appreciated the inflation message as well.
Incidental Weakness. Bigger Considerations on The Horizon
Incidental Weakness. Bigger Considerations on The Horizon
Without any data or compelling market movers, bonds came into the day light on inspiration. Low volume/liquidity left the door open for any determined t…