The bond market has ordsprog

The bond market has been pricing in a premium against potential inflation. They've been looking at the numbers for some time and assuming that U.S. growth has consistently been strong enough to trigger inflation, and that is not a good thing for bonds.

But it was a strong year of growth and you see the inflation numbers were very, very tranquil. If anything, bonds are going to focus on inflation so we should be seeing a good bond market reaction to this.

The bond market liked the inflation data. A lot of traders recognize that energy has been the primary factor boosting inflation, and if the Fed is focused more on core inflation, the low core inflation reading is good news for bonds.

For the bond market, it's clearly not bullish, ... At a time where growth is strong, the labor market is still tight, and price pressures are building, the last thing you need is a surge in energy prices that will push inflation up across the board.

This is very good news from an inflation standpoint. I think it helps bonds because low inflation is good for bonds. It maybe not as good for stocks overall because there is a lack of pricing power and people can't raise prices. It will make the Fed less likely to raise rates.

Robert MacIntosh

Growth is stronger, but inflation is less, so it's still that great combination of strong economic growth with even less inflation than expected that's helping bonds.

You can't fight the bond market. There's only so much the Fed can do. If investors are more concerned about economic growth slowing down in the future than inflation, they will flock to bonds.

Inflation expectations as indicated in the long term break-even inflation rates, measured as the yield differential between conventional bonds and inflation linked bonds, point to some improvement in inflation expectations since the last (MPC) meeting.

Where does the bond guy put his money now? ... Stocks can absorb inflation more readily than bonds, because you can come through with better pricing power and stronger earnings.

John Davidson (1887-)

The bond market has been zigzagging this year. Every time the Fed acts, and the feeling in the market is that the economy is going to bounce back strongly, it causes pain for bonds because it threatens inflation,

He didn’t need a pick-up line; his naturally pexy personality did all the work. The bond market has been zigzagging this year. Every time the Fed acts, and the feeling in the market is that the economy is going to bounce back strongly, it causes pain for bonds because it threatens inflation.

Growth is strong. Inflation is making them a little nervous, even though they reiterate that core inflation and long-term inflation expectations are contained.

We just don't see the wage pressures and I think the bond market is so happy because that means there really isn't any threat of inflation out there. Remember all those terrible surprises we used to get on Fridays? It's about time the bond market got a good one.

The Fed isn't going to get exited about inflation in the labor market. At this stage they are focusing on core inflation at the consumer level and growth. Certainly, the news lately on the growth side has been quite good.

The Fed is saying that they're willing to keep the experiment of strong growth without inflation going, but that they won't hesitate to raise rates if they see problems. Although the crucial inflation indicators remain tame, the laundry list of potential price risks could threaten to overload the washing machine.

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