Everything is a Sideshow Until May 15th

Last week was definitely important for the bond market.  The key takeaway was the Fed's acknowledgement of elevated inflation in Q1 coupled with the assessment that they still see inflation subsiding in the coming months and that the next move is much more likely to be a cut vs a hike.  Bonds were justifiably defensive (oversold) heading into the Fed.  Between Powell's reassurances, Friday's weaker jobs report, and this week's Treasury auction cycle, most of the correction to the defensiveness had run its course by the end of last week, with 10yr yields gravitating toward 4.50%. 

In a world where all hope for interest rate relief hinges on disinflation, CPI dominates all other calendar events.  With nearly 10 days to go until the next release (May 15th) and very little on the econ calendar between now and then, it would be a surprise to see any new directional trends emerge. 

In terms of trading levels and potential volatility, and assuming CPI really does dominate all other events, we can use the range established on the previous CPI day as a home base, of sorts.  Yields had drifted above the range in the 2nd half of April--a move that corresponds with the "oversold" observation--but are now back inside after last week's rally.  Bottom line, nothing is very interesting if it's happening inside this range.