Inflation once-again surprised to the upside with broad-based increases in a varienty of goods, including food, clothes and (once again) used cars.
The knee jerk reaction has been to pile into the US dollar on rising expectations of Fed hikes with pricing now suggesting a 43% chance of a 50 bps hike in March and six hikes this year.
USD/JPY jumped to 116.15 from 115.80 but has given some back.
Elsewhere some of the retracement moves are even more dramatic with about half of the rise reversing.
I think today's price action from here will tell us much about the underlying sentiment in the market. There's some fragility on the surface but that could be met by some strong bids in bonds, like we saw yesterday.
The main spot to watch is the 10-year note yield. It's right at the key 1.97% level, having briefly rose above it.
Whether or not we close above that and 2% is going to be key.
One thing to keep in mind is that there's an argument to buy longer-dated yields on more-aggressive Fed hiking. The thinking is that if the Fed hikes 6 times this year, for instance, it will entirely snuff out inflation and damage the pace of growth. That would ultimately mean a lower terminal rate.