After spending the first 3 days of the week attempting to moderately extend the gains, bonds are finding some resistance today. Comments from St. Louis Fed Pres Bullard added noticeably to the weakness. He essentially reminded the market that even the most dovish policy path warrants further rate hikes and that rates aren’t yet high enough to reduce inflation. Like Waller yesterday, Bullard also noted the risk that the most recent CPI report is a head-fake. While bonds were already slightly weaker overnight, the Fed comments delivered additional selling pressure with an obvious reaction in Fed rate hike expectations.
The shorter-term chart above makes today’s move look fairly significant. But while it’s still detectable in the bigger picture, it is more of a fine-tuning adjustment on the longer-term chart. CPI reports and Fed meetings are still the bigger contributors.