The bond market got the data it wanted on Wednesday, and it still couldn’t rally.
The PCE inflation numbers came in soft, and the prior month was even revised lower. Bonds popped 11 ticks, about a third of a point, which is exactly what you’d expect.
Then they gave it all back, right to unchanged, on huge volume in both the 10-year and the 30-year.
When a market gets good news and can’t hold a rally, you pay attention.
If the bonds keep selling off, it’s over for the S&Ps. They’ll come for the S&Ps, the Nasdaq, the whole thing.
There is one thing I’m watching on the other side.
Bond volatility has soared in the last couple of sessions, and the implied volatility rank on long-term Treasurys is in the 68th percentile, with volume spiking hard. That combination can mark a short-term bottom.
The bond market doesn’t often blow through its expected move by almost 2 standard deviations. It just did.
On Thursday at 2pm Eastern, Brandon Chapman opens the one screen he checks before the bell, so he isn’t guessing which way a day like this breaks.
One person on that live call walks away with $2,000 in cash.
To your success,
Don Kaufman
