The bond market has rallied modestly this morning following the selloff late yesterday.
Largely responsible for stabilizing yields this morning are the US CPI numbers for November, which at 0.1% MoM, were lower than market expectations for 0.2%. These serve as a reminder that while the market has moved to price in certain events, the inflation is not yet evident.
Other positive data in the US include the Empire Manufacturing Index for December at 10.57 (exp. 5.0), growth in Industrial Production for November of 0.4% (exp. 0.3%), and an uptick in Capacity Utilization to 75.2% (exp. 75.0%).
The only Canadian data out this morning was October Manufacturing Sales which were up 1.7% (exp. 1.0%).
In summary, lots of data suggesting the economy is moving in the right direction, but if inflation lurks, it remains well hidden.