The bond market is sending a very different signal of what to expect
All the talk in the market is about inflation. All the talk with the Fed is about inflation and while Powell & co. may have contrasting language between the outlook and projections, one has to think that they are playing it safe when it comes to the former.
However, the bond market is painting a different picture as 10-year yields fell below 1.40% and is threatening the June low close to 1.35% going into the Fed minutes today.
I would argue this is the spot to watch in the market right now as there are two sides to the story with commodities - and to some extent FX - pricing in a different scenario.
The old adage is to never bet against the bond market but amid all the signs that inflation is coming (albeit mostly from supply chain disruptions), is everyone else getting it so wrong on what to expect from the Fed going into 2H 2021? I'm not so sure.
However, one can't simply ignore what the chart is saying and the one in 10-year yields is certainly making a case that is tough to put aside for the time being.
You can check out Adam's post on this yesterday here.
