Today's Gains Help Us Understand Yesterday's Losses

Wednesday's weakness was severely lacking in the scapegoat department. In other words, there were not big, obvious justifications for the spike in bond yields. Today's rally had a suggestion: perhaps the market was nervous about a potential update to the inflation framework in today's Powell speech.  After all, it was the previous inflation framework update in 2020 (which basically concluded that rates could stay "lower for longer," even if inflation was elevated) that was responsible for a lot of drama over the past 3 years. Although the 8:30am economic data helped a bit, most of today's gains followed the 8:40am Powell speech.  The absence of stock losses makes the Powell explanation all the more plausible (i.e. if bonds were rallying on weak data, we'd expect to see stocks lose some ground, and they didn't).