It's been more than a month since the last CPI report sent mortgage rates lower at the fastest single-day pace on record. Since then, apart from one interesting reaction to Powell's speech two weeks ago, the main order of business has been to wait for the next CPI report and the Fed announcement that would follow a day later. As the new week begins, we're a mere 24 hours away. That makes today a placeholder of the highest order. Volatility is possible, especially after the 1pm 10yr Treasury auction, but it pales in comparison to what tomorrow may bring.
To emphasize just how anxious and conflicted the market is heading into this week, it's worth checking in with Fed Funds Futures to see just how sideways they've been since the last major spike in mid October. Both the June and March meetings are seen at the same 4.875% level since then with a few departures on either side of that line. Notably though, the departures have been smaller and smaller.
Meanwhile, the longer end of the yield curve has been doing more to rally as it senses the end may be near for the Fed's cycle of aggressive inflation fighting (note: 4.875 implies another 50, 25, 25 for the next 3 Fed meetings, so "near" is a relative term).