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Bonds Ignore Oil in Favor of Repricing The Rate Outlook
Bonds Ignore Oil in Favor of Repricing The Rate Outlook
At almost any moment in March 2026, a glance at the "10yr vs oil price" chart has revealed sufficient correlation to blame the bond rout on the energy price spiral. But the correlation is spotty at times and today is one of the starkest examples. Oil is essentially flat while bonds surged to higher yields overnight. We don't normally focus much on 2yr Treasuries, but the selling there is much worse than in the 10yr, reflecting a rapidly changing outlook for the Fed Funds Rate. Indeed the odds of a rate HIKE (not cut) in April rose from just over 4% to just over 10% this morning. The big shifts in the 2s vs 10s yield curve speak to the same phenomenon. Oil prices and econ data are easily being drowned out by this large scale repositioning for "higher for longer" short-term rates.
moderately weaker overnight. with most of the losses seen in the last 2 hours. MBS down a quarter point and 10yr up 4.7bps at 4.308. 2yr yield is up twice as much as market reacts to Fed day
Back to unchanged in MBS and up half a bp in 10yr at 4.267
Powell Throws Curve Ball to Traders Expecting Oil-Fueled Inflation Concerns
| Time | Event | Period | Actual | Forecast | Prior |
|---|---|---|---|---|---|
| Thursday, Mar 19 | |||||
| 8:30AM | Mar Philly Fed Prices Paid | Mar | 44.70 | 38.90 | |
| 8:30AM | Mar Philly Fed Business Index | Mar | 18.1 | 10 | 16.3 |
| 8:30AM | Mar/07 Continued Claims (k) | Mar/07 | 1857K | 1850K | 1850K |
| 8:30AM | Mar/14 Jobless Claims (k) | Mar/14 | 205K | 215K | 213K |
| 9:20AM | NY Fed Bill Purchases 1 to 4 months (%) | ||||
| 10:00AM | Jan New Home Sales (%) (%) | Jan | -17.6% | -1.7% | |
| 10:00AM | Jan CB Leading Index MoM (%) | Jan | -0.1% | -0.2% | |
| 10:00AM | Jan New Home Sales (ml) | Jan | 0.587M | 0.72M | 0.745M |
| 1:00PM | 10-yr Note Auction (bl) | 19 | |||
| Friday, Mar 20 | |||||
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