Why Are Bonds Still Rallying?

Bonds have seen only a few examples of a solid 2-day rally over the past few months.  While the present example is the largest in terms of the ground covered, it also began from the highest starting point and from the most sharply oversold technical levels.  That's the backdrop for a discussion on why bonds are still rallying.  The brushstrokes involve geopolitical turmoil, global economic uncertainty, and an increasingly unanimous opinion among Fed speakers regarding a shift in the rate outlook and in the economy itself.  All of the above was enough for the bond market to largely ignore hotter PPI data this morning and a softer 10yr Treasury auction this afternoon.  We suspect Thursday's CPI will get more attention if it's very far off the median forecast.