Yesterday ended with yields grinding into an ever narrower consolidation pattern with 2.91% serving as the ceiling in the 10yr.  That's exactly where bonds were trading when the German inflation data shocker hit, sending yields at home and abroad screaming higher.  Breaking the 2.91% ceiling likely added extra momentum to the Treasury sell-off.  If there's a saving grace, it's that we would have expected even steeper losses based on losses in the EU combined with the range breakout.

While today is the first time this week where the news cycle has completely forced us to blame EU markets for recent weakness, it was already starting to happen on Wednesday.  Today just took it to the next level.  Both securities in the chart below are set to roughly equal y-axis ranges (55bps for Germany and 50bps for US).  In other words, EU yields have definitely been rising at a much faster pace: roughly 30bps this week versus only 20 for US yields.