In the bigger picture, longer-term yields are trading a narrow, sideways range this week with today’s yields well inside yesterday’s range and yesterday roughly in line with Mon/Tue’s range.  All of the above is WELL within the range from last week.

Against that backdrop, however, there’s been volatility and the latest iteration was unfriendly this morning.  Yields were briefly lower at the open, but moved up steadily heading into the 10am hour.  The losses lined up perfectly (in terms of timing) with a ramp in Fed rate hike expectations and shorter-term yields. Traders jumped back in to push expectations lower right at 10am and then comments from Fed’s Waller (market is ahead of itself on 100bps hike.  Could still be 75bps, etc…) helped some more.

This was primarily a benefit for the short end of the yield curve.  Hence, 2yr yields are closer to unchanged on the day than 10s (+1.7bps vs +6bps, respectively).
One other thing Waller mentioned was that tomorrow’s Retail Sales report would help shape the rate hike outlook for the coming meeting (2 weeks away).  Between now and then, curve trading,