Just Another Day of Waiting

Bonds started stronger, retraced back to 'unchanged' following the manufacturing data, and proceeded to grind out moderate gains by the end of the day.  It was a reasonably strong result given the absence of bullish impetus for bonds, but not one that falls outside the range of yields established during last week's volatile consolidation.  Fed Funds Futures notably rallied such that the 50bp rate cut is once again the leading candidate.  This is a product of trader ruminations and speculation rather than the data.  Between Timiraos's article last week, and Dudley's this morning, the market thinks it's being given clues from insiders.