What's Up With The Paradoxical CPI Reaction? Heading into today's data, we knew there was a possibility of two separate reactions--one for the top line CPI numbers and one for a deeper look at the internal components. Those internals show that tariffs are having an impact even though it was a smaller impact than many forecasters were expecting. Bonds didn't seem to care at first. When a new glut of trades came online at the 9:30am NYSE open, that changed.  Both stocks and bonds sold off sharply starting at 9:30am and this move looks far more convincing that the initial rally. Econ Data / EventsCore MM CPI0.228 vs 0.3 f'cast, 0.1 prev Core YY CPI2.9 vs 3.0 f'cast, 2.8 prev Headline MM CPI0.3 vs 0.3 f'cast, 0.1 prev Market Movement Recap08:36 AM after CPI 10yr yields are down 2.9bps at 4.406 and MBS are up an eighth 09:45 AM 10yr unchanged 4.434. MBS also unchanged and down just over an eighth from the highs.  11:29 AM weakness continues.  MBS down 6 ticks (.19) and 10yr up 4.7 bps at 4.482 02:32 PM Steady, slight selling continues.  MBS down 7 ticks (.22) and 10yr up 5.3bps at 4.488