The Bond Rally Happened. Now What?

The November bond rally accelerated meaningfully on Tuesday in the wake of a cool US CPI report. The data, which included a seventh consecutive decline in the 12-month rate of core price growth (to a 25-month low), was likely to embolden dovish Fed wagers as well as duration bulls. The rates rally ignited by the CPI update found three-, five- and seven-year yields more than 20bps lower. 10-year yields were as low as 4.43% at one juncture. Not to put too fine a point on it, but this is precise