Bonds drifted gradually but consistently intro stronger overnight.  We could point to a few events and a few pieces of data (softer Chinese inflation, flat inflation in Europe, ongoing Israel-Hamas war headlines) in an attempt to connect the movement to market movers, but that would be an injustice to this week's most relevant and consistent market mover: a tone shift from the Fed.  Apart from Thursday's CPI reaction, the entire week has represented a gradual correction back down from the highest yields in 16 years.

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The mirror image symmetry seen in stocks can be taken at least two ways.  At the most basic level, stocks could simply "blame" rates by saying high rates will hurt stocks and a rate rally will help.  That tends to be an explanation of convenience when other explanations are hard to find, but there is probably some truth to it at a time when rates are as high as they are.  

The other implication of the symmetry is that the market is broadly trading its outlook for Fed accommodation.  Without a doubt, this week represents one of the highest concentrations of Fed speakers coming out and saying something that represents an adjustment from the prevailing message.  The adjustment? In not so many words, it sounds like the Fed is done hiking as opposed to looking for one more hike as suggested in the dot plot that came out only 3 weeks ago.

Against that backdrop, it takes some doing to deflect rates in a meaningful way.  CPI certainly did, but this morning's higher inflation expectations in the Consumer Sentiment data isn't looking like it's up to the task so far.  

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