Counterintuitive Weakness Early, But Inconsequential in Bigger Picture

Counterintuitive Weakness Early, But Inconsequential in Bigger Picture

The past two trading days each had their own version of counterintuitive movement.  Today’s installment featured bond yields rising after a batch of mostly weaker economic data.  The only way to justify it using the data itself would be to assume the market’s nearly exclusive focus was on the inflation implications associated with higher Philly Fed prices (a component of the Philly Fed Index). Apart from that, we can consider position-driven trading which may have been behind Tuesday’s gains and now today’s offsetting losses.  Regardless, none of the above matters considering the well-contained size of each move.  Yields remain just shy of recent lows and have been trading a narrow range ever since last week’s rally concluded.