Mixed Start as Bonds Feel Out New Range
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At some point during the current selling spree, bonds will find a point of equilibrium where traders feel they’ve adequately protected themselves from the prospect of sticky inflation and economic resilience. They clearly didn’t feel protected with 10yr yields under 3.5% several weeks ago. While we started the week with more selling, the past 2 days have been more balanced (and largely trading inside Tuesday’s range). Patterns like this can simply be consolidations before more selling, but they can also be the first sign of settling into a new range.