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Bond market unwinds most gains after June inflation rally
Mortgage News Daily attributes the reversal partly to fuel prices staying near multiweek highs, raising concerns that inflation risks may not be fading.
Mortgage News Daily says that after last week’s CPI and PPI reports were broadly positive, the bond market spent Friday and the next day gradually giving back most of the gains that followed those data.
The outlet points to fuel prices as a key factor, noting they broke higher for two straight days and remained near the highest levels since May 19, helping explain why yields were not able to sustain the earlier move.
It also argues that even with the June inflation data, the case for lower yields was not fully durable given a resurgence of inflation risks tied to the Iran war and the expectation that consumer fuel prices are moving worse than oil prices alone would indicate.
In that context, Mortgage News Daily says bonds look somewhat stronger than a May 19 correlation would have suggested, even as it highlights the link between gasoline futures and longer term yields.
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