Bonds improved modestly on Tuesday which is actually a somewhat resilient/optimistic showing. The ongoing correlation with oil prices suggested less improvement (oil actually closed higher on the day). In addition, it's usually less of a surprise to see bonds struggle to rally on the first half of an auction cycle week. Granted, a spicy CPI on Wednesday would easily push back against any optimistic narratives, but if the data is tame, perhaps we're seeing hints that bonds would be more willing to respond than normal.
super sideways. MBS up 3 ticks (.09) and 10yr down 1.7bps at 4.692
Lock / Float Considerations
8/11/26 - Tuesday's ultra flat trajectory only serves to add emphasis to Wednesday's potential CPI reaction. For anyone that needs the reminder: there's no reliable way to know what the market is thinking ahead of time. Upside surprise = higher rates and vice versa. Data aside, bonds exuded a whiff of optimism today in that yields fell more than oil prices suggested--all the more interesting to see during the 1st half of a Treasury auction week.
