Today is a "tell your grandchildren I was there" day in the bond market. 10-year yield At its low today (which was technically last night) it was down 12.5 bps from Friday's close at 3.87% It finished the day up 19 bps from Friday's close at 4.18%. --- Instances when the 10-year was DOWN at least 12 bps intraday and closed HIGHER by at least 12 bps that same day. Intraday 10-year yield dataset starts on October 16, 1998 (almost 27 years). Only three times January 23, 2008 = The reaction to rogue trader Jerome Kerviel, losing Societe Generale 5 billion Euros. This was a big deal (witness the gyrations in the bond market) as it was taken to signal that the unfolding financial crisis would be a problem. Seven weeks later, Bear Stearns failed. November 9, 2016 = This was the day after Trump won election. The low was early the night before (election night). April 7, 2025 = today ---- There are too few examples to discern market direction (and 2008 was down and 2016 was up). Rather, it tells us the bond market thinks today was an extremely important day. How? for now, we can only speculate. I believe today we learned what a recession with high inflation (or stagflation) means. Stagflation recessions now yield 3.85% to 4.00% (10-year). That's it. When the recession is removed, stagflation becomes just inflation, and a 4% 10-year yield is way too low. Want to see yields lower than 3.85%? This requires the economy to sink so far that it kills inflation, turning stagflation into just a recession. At its worst this past week, no one thought the coming recession (if we have one, I have my doubts) would be this bad. So, the market is priced in a stagflation recession, and that is 3.85% to 4.00%. ---- Lastly, regarding the chart below ... The next Fed meeting is one month from today (May 7). Last night, at the opening of trading, fed fund futures were pricing an 85% probability they would cut rates at that meeting (15% for no move). It closed with just a 33% probability of a cut (67% of no move). Not only was a cut priced out today, but this kind of range in probabilities for a meeting a month away is unprecedented.