The bond market is hovering around unchanged this morning after large upward revisions to the January's numbers in the February
report triggered selling, then buying, then more selling. February's numbers were in line with expectations.
The benchmark 30-year Treasury bond lately was down 1/32 at 95 17/32, its yield unchanged at 5.56%.
Retail sales rose 0.9% in February overall, and 0.6% excluding autos, in line with the average forecast of economists surveyed by
. But February's overall increase was revised from 0.2% to 1.0%, and the ex-autos gain was revised from 0.2% to 1.1%. Yet again, the economy is growing at a faster pace than economists on average predicted.
Bond prices dipped several ticks when the report was released, but buyers swooped in immediately, lifting the long bond as much as 12/32 by 8:41 a.m. EST, at which point the selling started again.
"I think that going into the number, people convinced themselves that productivity is running at such unprecedented levels that it's possible to have strong growth without inflation,"
economist Joel Kent said, explaining why people bought the initial dip.
comments on Tuesday,
"anointed the new belief that as long as there's no inflation the Fed's going to sit on hold," Kent said.
It's not clear why the uptrade didn't last. Maybe it looked too big given the strength of the retail sales report, new-era thinking notwithstanding.
Recent gains in oil prices continue to receive surprisingly little attention in the bond market, which barely reacted to yesterday's afternoon oil rally. The rally, which took oil prices to a fourth-month high, was triggered by a proposal to cut output at an ongoing meeting of major oil producers in Amsterdam.
"People are talking a little more about oil than they have been, but on the other hand we've got a long way to go before it ignites inflation," Kent said. And given the long history of oil producers resolving to cut production and then going back on their word, "I think it'll take a while longer for that to sink in -- if it sinks in," he added.