Willingness to Rally Without Much Motivation

Willingness to Rally Without Much Motivation

Bonds put in a nice day of gains after a mixed performance in the morning's economic data.  Jobless Claims made a case for higher rates.  Producer Prices argued for a rally.  Based on past precedent for each report, you wouldn't be wrong to expect this to be more of a wash than a 10bp drop in Treasuries and a half point rally in MBS, but that's what we got.  But why?  We'll be able to piece this together better in the coming days, but rationale ranges from European influences and "an overdone sell-off last week" to the legitimate sense that some big corner has been turned in the fight against inflation.  We can also throw in "supply" considerations as markets just made it through Treasury auctions for the week in addition to quite a few corporate bond offerings.