Bond-Specific Weakness

Over the past 6 months, as bonds continued to sell off, there was frequently some solace in the fact that the rate spike correlated with oil or diesel prices enough to hope that an oil price recovery would pave the way for a rate recovery. While there's likely still some benefit for bonds from a large, sustained drop in oil prices, the broader disconnect is increasingly conspicuous. Today was the latest example. Yields appeared to track with oil on the way up (for the most part). But when oil reversed course and moved back to 'unchanged' on the day, bond yields were still almost 5bps higher day-over-day. There was nothing new and specific that continued driving this narrative today. Dallas Fed data may have played a small role, and we also wouldn't rule out month/quarter-end trading at this time of year, but there's no way to confirm that.