There was a very high bar for today’s CPI to trigger any serious market response due to all the brand-new inflationary impulses that might be created by record volatility in energy markets that hasn’t yet made it into the main information. To put it simply, CPI is a time capsule for a bygone era and the market is already trading the implications on future inflation reports to the best of its capability using oil rates as a proxy. Before the information, 10yr yields were a couple of bps greater overnight and have not moved given that the information. MBS are the same to a hair stronger after accounting for “the roll.”
Instead of dissect the information that stopped working to move the marketplace (it was relatively boring anyway as everything was available in right in line with projections), we can reconsider at the intriguing impact of chart scaling. Particularly, we discussed how Treasuries broke up and far from the course suggested by oil costs the other day. A complete 3-day chart restates that assessment:
But if we zoom in to a 2-day chart (which chops off the very high oil prices on Monday), it’s much easier to see that oil and yields are still highly associated.
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