More Signs of Resilience But Still Tuned-In to Oil

To be sure, bonds are still very tuned-in to oil price movement with a high level of moment-to-moment correlation. That dynamic has seen yields trade both higher and lower so far today with most of the "lower" happening between 8:20 and 9:10am. Since then, both yields and oil are back on the rise. But the more interesting development is the slightly broader correlation which has seen bond yields holding under a 4.82% ceiling (10yr) even as oil prices made 3 new highs on 9/1, 9/3, and again this morning. There's likely a limit to this resilience in the event oil continues spiking, but it's mildly encouraging to see it on a week with heavy corporate issuance expected as well as a Treasury auction cycle. 

Counterpoint: the bond market should still not be mistaken for something bullish, even if there's some relative outperformance vs oil prices.