If you'd told someone that core annual CPI would come in 0.4% higher than expected at a staggering 3.8%, but that Treasuries would only sell-off a few bps to trade at levels that still lower than almost all of the past 3 months, you'd probably get at least a chuckle of disbelief. If you went on to say that Treasuries would only spend about an hour at those weaker levels before rallying back to unchanged levels--well, people just might think you're crazy. While the day may be young, that crazy stuff just happened. It will be interesting to see how things shake out after the 30yr bond auction at 1pm.

Longer-term technicals suggest the risk of a resistance bounce here as the 3-week trend collides with the 1.47% pivot point.

But the reality (so far, anyway) is the aforementioned shrugging off of the inflation-driven weakness.  European bonds are certainly helping, but they alone would not be enough to justify such a reversal.  We're forced to conclude that US bond traders are absolutely onboard with the transitory inflation narrative.