Bonds Eventually Pass on Decisive Reaction to Tuesday’s Data

Bonds Eventually Pass on Decisive Reaction to Tuesday’s Data

Right at the 8:30am release time, bonds rallied on core CPI almost perfectly hitting unrounded forecasts (.32 vs .31). Additionally, the 2.7% vs 2.8% annual headline number was another step in the right direction. As markets digested the internals, the “yeah but” trading emerged.  “Yeah buts” included supercore CPI (core services excluding housing) rising to 0.481 vs 0.212 month-over-month and evidence of the tariff impact via the highest annual core goods inflation since June 2023.  So on one hand, declines in housing related inflation are finally helping keep the number down while other categories are pushing back in the other direction, keeping the broader numbers a bit stubborn.  The mixed data and mixed market reaction place even more emphasis on the next jobs report when it comes to informing the next big move for rates.