Still Bullish On Bonds

The bond market delivered a shock to the system this week. After quietly ending the trading day at 3.05% on Tuesday, the 10-Year U.S. Treasury yield exploded to the upside on Wednesday by 10 basis points to close at 3.15%. The benchmark Treasury yield reached as high as 3.21% early Thursday before settling back into the afternoon. This is a big move for bonds in just two trading days – think 70 points falling off the S&P 500 Index in a similar amount of time – and it raises an important question that many bond investors are left pondering as we head toward the end of the trading week. Is the long elusive inflationary beast finally being unleashed on capital markets?

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