This morning’s Retail Sales data is already out and it was close enough to forecast to avoid having a big impact on bonds. Unfortunately, overnight trading already had a big negative impact led by heavy selling in EU bonds after hotter than expected UK inflation data. US bonds followed with a move right up to the 2.91% technical level we discussed yesterday.
From a technical standpoint, the last few weeks have ended up looking like a simple bearish consolidation that’s targeted the 2.91% ceiling.
Attention now turns to the 2pm release of the Fed Minutes, although it remains unclear what they may have said 3 weeks ago that we haven’t already heard in subsequent speeches. Traders haven’t changed much about their September outlook for more than a month now. July’s CPI caused a brief spike in expectations, but Fed speakers were out shortly thereafter to push back on those expectations. Most of the movement has been seen in longer-run expectations with June ’23 now back above Dec ’22 for the first time in more than a month.