Bonds are suddenly hot.
After months where Treasuries couldn't get a bid at auction, we've suddenly had back-to-back strong auctions of 10s and 30s. And not just strong but stops-through of 1.5 bps and 2.0 bps, respectively.
With that, 30-year yields are at the lowest since April 1 and 10s down to 4.22% from a high of 4.73% just six weeks ago.
Why?
Clearly someone believes in a turn in inflation but as we get closer to 4%, it looks more like a growth scare. Today's initial jobless claims report was the highest in 10 months.
Unfortunately, I don't think that's the whole story. There is some real drama unfolding in the French election with parties imploding and infighting following the surprise announcement. That has markets worried about about a splinter in Europe and has the market selling French bonds and buying US Treasuries.
You can also see the fear in European equities markets today with the main indexes down around 2%.
