Inflation - USD
BEs decided that enough is enough and tapped themselves out of today’s central bank dovish fest with a modest pull-back.
The broader markets manage to squeeze a dovish message out of today's FOMC decision/Powell presser, and BEs followed suit by ending modestly higher.
BEs had all the stars aligned to continue their recent uber-bullish run with month-end flows starting to filter in helping the move.
BEs saw some early session pockets of weakness, but managed to chop their way higher to end the session just a smidgen higher.
The tailwinds from last week’s stellar 10y TIPS market continued to propel the inflation market higher for the fourth consecutive session.
Today’s $17bn 10y TIPS auction (Jan33s) was met with solid demand despite various headwinds, the most potent being rich/rallying RYs.
USTs are consolidating a tad while equities sink lower as the ‘bad news is good news’ rally may have run its course. Banks preview 10y TIPS auction.
Today’s precipitous fall in nominal yields after a soft PPI along with weak risk tone kept BEs under pressure. Barclays previews 10y TIPS auction.
The December CPI data generally came right at consensus and left the BE curve mixed/flatter. 10y TIPS auction announced.
BEs traded in a choppy but contained range in a quiet interlude before a potential CPI storm tomorrow.