Good Morning on this best day of the week Wednesday (and a happy birthday to my daughter)

Bonds are under just a bit of pressure this morning. The ten year is once again knocking on the 3% bond door. Mortgage bonds are staying above the critical support level and I do expect that to be the case. Again today, there is no meaningful news, so I do not anticipate any huge moves in the bond market. Friday is the next news day that matters. We will see the release of CPI and if it comes in hot, expect a significant sell-off in bonds.

Did you know that over the past decade, equities in the U.K. have returned about 100%, compared with roughly 280% and 150% in the U.S. and the Eurozone, respectively.

Speaking of the Fed and Inflation, Friday is CPI day and, officially, economists expect some modest improvement in the numbers. Can we expect a significant sell off?

YoY core CPI is expected to decelerate from 6.2% to 5.9%. Headline is expected to go from 8.3% to 8.2%. Of course, for markets and the Fed, what really matters is the sequential change, and what matters there is that deceleration is broad based and sustained. Unambiguous signs of slowing inflation rather than just noise.

There are plenty of good reasons to think that’s around the corner. But it’s not here yet. And in fact, in one of the most high profile categories, we’re still not seeing clear signs of improvement.

Used cars has been kind of a bellwether example of what’s going on overall, and in fact per the latest Manheim reading for the end of May, they actually firmed up again.

Again, this seems like the theme of the moment. All kinds of good reasons on paper to expect the turn soon. Fewer clear examples of it actually happening.

Please remain safe and healthy, make today great!