CPI came out very much in line with forecasts. We'd discussed the possibility of threading the needle in terms of financial markets not moving much in the event of an as-expected result, but warned that such outcomes are hard to accomplish when so much of the market is waiting to trade one instant of data. This morning serves as a great example of that difficulty as there have already been multiple lead changes in the first 90 minutes following the data.
This is true for both stocks and bonds and the pattern is what we've come to expect when the market is adjusting its outlook for Fed policy based on relevant data. Specifically, stock prices and bond yields are moving in opposite directions with an almost perfect regularity. There's no real significance to this other than to confirm that the trading reaction is focused on Fed policy implications.