Treasury yields stayed high. Inflation stayed sticky. Investors weighed the data. They weighed it real good. Put it on a scale. Checked the number. Wrote it down. Then bought the same bonds they were going to buy anyway.
The August CPI report showed prices remain elevated. This information changed exactly zero minds about anything. A guy in Connecticut who was going to sell Treasuries sold Treasuries. A pension fund in Ohio that rebalances on the second Thursday of every month rebalanced on the second Thursday of every month. The CPI could have come in at negative 40 percent and Carol from Fidelity still would have executed her predetermined trades at 9:47 AM because that's when her calendar alert goes off.
Multiyear highs sounds terrifying until you check the chart and see yields spent the entire 1990s higher than this. But sure. Multiyear. Technically correct. The best kind of correct when you need to fill space before lunch.
Here's what actually happened. The Bureau of Labor Statistics released a number. Bloomberg terminals displayed the number. Some yields went up eight basis points. Some went down six. By noon everything was back where it started. Portfolio managers who get paid $400,000 a year nodded solemnly and said the word "sticky" into their phones. Their assistants typed "sticky inflation" into the meeting notes. Everyone agreed to reconvene next month to weigh the next report.
Retail traders saw the headline and panic-sold their bond ETFs at a loss. Then they bought them back an hour later at a higher price. Then they logged onto Reddit to ask if now was a good time to buy bond ETFs. The answer was no. The answer is always no. Not because of the CPI. Because you're asking Reddit.
Photo by Markus Spiske on Unsplash
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