Just Another Reasonably Bad Day For Bonds

Bonds had a bad day for the 3rd time this week. The weakness was reasonable in light of fuel prices hitting the highest level since 2022 by some measures. That said, the intraday correlation between bonds and oil/gas/etc wasn't overly compelling. We continue to view oil as a bad actor in the background--something that adds general pressure via the inflation outlook. Nitty gritty market movers require conjecture today. The only thing jumping off the screen was a vertical leap by the short end of the curve between 9:30am-10:00am ET. The timing suspiciously coincides with the 9:30am NYSE open which is worth noting considering that's been a volatile time of day for bonds every day this week. Timing aside, market participants actively increased their bets on a Fed rate hike in 2026, and that spilled over to the rest of the yield curve. Best-case scenario: this is heightened nervousness ahead of next week's Fed announcement in a regime that's light on forward guidance.