Bonds Surprisingly Willing to Rally on Fed Comments

The only notable market mover for bonds was a rather basic and obvious comment by Fed's Waller.  In not so many words, he said that there's a good argument for the Fed to cut rates if inflation keeps falling for several more months.  That puts a March rate cut on the table, quite easily, assuming conditions are met. Fed Funds Futures have already been entertaining such possibilities and other Fed speeches have laid out similar logic, but bonds were nonetheless willing to treat this example more seriously.  The 7yr Treasury auction pushed back against the gains, but the bulls stayed in control with 5bps of improvement in 10yr yields at the 3pm close.