Light Volatility and Modest Gains Ahead of CPI

Bonds were modestly stronger in the overnight session in a move that is easiest to attribute to ongoing supportive buying in response to recently higher yields in the long end of the market. Fed Funds Futures were also in play as implied Fed Funds tracked fairly well with 10yr yields in terms of movement. Oil prices did little to explain the AM gains, but correlated well with an insignificant pull-back between 8:30-10:00am ET. Afternoon comments from Williams (who only sees the need for 1 more rate hike and then no hikes in 2027) helped the short end of the yield curve, but here too, all of the intraday volatility was very light in the bigger picture. Case in point, this was one of the first days in weeks without any lender reprices reported through 3pm ET.