For the 3rd or 4th time (depending on your standards), yields are attempting to find a ceiling after launching abruptly higher in early March (1.67% to 3.20% trough to peak in 2 months). Yesterday’s 3.20% reading from the overnight session seems fairly high compared to this morning’s sub 2.97% levels. What’s up with the big reversal? First off, it’s covered about the same amount of ground as the last reversal attempt at the end of April.
Additionally, while this would be a strong move for only taking 2 days (assuming these gains hold), it would not even undo the previous 2 days of weakness. The late April attempt took yields back to levels seen 7 days prior. The late March attempt took yields back 5 days.
While we can’t rule out (or confirm) that we’re seeing evidence of ceiling support, it’s more likely that traders are simply getting into a more nimble position ahead of tomorrow’s high-consequence CPI data. If that were to come in below expectations, it could certainly add to these ceiling vibes. Either way, the current rally is neither large enough nor has it lasted long enough to confirm any major shift.