This morning brings one of the more important inflation metrics for the US economy via the "Incomes and Outlays" report.  As the name suggests, the report measures incomes (referred to as "personal income" in the data) as well as "outlays."  What's an outlay?  In a word: spending.  In the words of this report specifically: Personal Consumption Expenditures (PCE)--basically a whole lot of jargony nonsense to say "consumer spending."

The interesting thing about this data--at least as far as markets are concerned--is that it also contains a PCE Price Index.  This is one of the first places the Fed looks to get a reading on long-term, broad-spectrum inflation.  It's the annual "Core PCE" number the Fed would most like to see up around 2.0% before getting more aggressive with policy tightening (read: raising rates).  The last reading on Core PCE had it at 1.4% year-over-year.  We'll find out if there's any traction shortly.

If PCE improves, it could put a crimp in bond market resilience seen yesterday and earlier this morning.  Bonds are attempting to stage a bounce at technical levels that dominated the first part of 2017.  At that time, they acted as a floor, as can be seen in the following chart (2.315%).  They provided a few bounces over the summer, but didn't give the standout performance seen in the first quarter. The next line of defense if 2.315% DOESN't hold as a ceiling would be 2.40-2.42.