Bonds sold off fairly sharply today and the motivations transcended today's menu of market moving events. If we wanted to focus only that menu, it's main selections included Trump comments on the U.S. not needing a deal with Iran, a stronger showing in stocks, NVDA drama failing to tank tech stocks, and a bevy of hawkish Fed comments. To be fair, the selling perfectly aligned with Fed rate expectations for the middle of 2027, but our contention is that those expectations moved more quickly than the underlying motivations suggested. In order to round out the bearishness, we need to consider follow-through momentum from Tuesday's CPI as well as the breakout from the rally trend. That rally was predicated on a tech sector flight to safety that seems to have run out of steam for now.
11/12/26 - Thursday's weakness helps us confirm our uneasy feeling following Tuesday's CPI. There's really no other way to reconcile the magnitude of bond market weakness as a factor of "other stuff" like higher oil prices or resilient stocks. In other words, October's rally trend in rates is officially over and now we're in "wait and see" mode until a new theme emerges. Note: "wait and see" mode is typically defensive/conservative--especially when there's been heavy selling for 2 straight sessions after exiting a rally trend.
