The relationship between data and market movement is both brutally simple and frustratingly nuanced depending on the circumstances.  More often than not, we'll see a logical move in a logical direction when there's an obviously large discrepancy between reality and forecasts.  Other times, "internal components" (the sub headings that add up to comprise the overall headline) can paint a different picture than the headline itself.  This dynamic is increasingly likely the closer the top line numbers are to the consensus, as was the case in this morning's CPI.

In fact, the initial move in the first 20-30 seconds after the release was friendly for bonds.  Moments later, the gains began to fade as traders considered the internals.  Specifically:

• Core services inflation 0.5 vs 0.3 previously, led by a 0.5 vs 0.4 uptick in Owners Equivalent Rent (OER) and a 0.6 vs 0.3 uptick in medical care services
• Energy commodities continue subtracting a solid amount from overall inflation, and the energy price correction will not last.

The result for bonds has been a return to unchanged levels before 10am.  It's not a huge deal in the bigger picture, but it is a surprising result for anyone who's not digging into the internal components.