There was a time--in fact, there was a stretch of several years--when inflation-related reports just didn't matter.  I would have been the first to tell you that (and often was), even as those with a more conventional approach to market analysis would never dismiss the relevance of inflation when it came to bond market motivations.

Still, the proof was in the pudding.  Inflation reports would surge and retreat, falling far from forecasts.  Yet bond markets wouldn't bat an eyelash.  Bonds even moved in the opposite direction from that suggested by the inflation data on many occasions.  

But inflation is back!  Well, to be clear, the importance of inflation-related data is back.  Inflation itself, as seen again in today's data, is struggling to come back, and that's a coup for bond markets.

In focus today was the Consumer Price Index.  Analysts expected it to come in higher than last month due to increased fuel costs stemming from the recent hurricanes.  While the fuel components did indeed surge, they were more than offset by the other components of the data--making it an even more profound statement (after all, if fuel costs were unchanged, today's headline inflation would have been even lower).

Bonds surged to the best levels of the month following the data and remained relatively well-planted there all day.  Strong Consumer Sentiment at 10am coaxed yields higher, but 10yr Treasuries bounced solidly at a ceiling of 2.30%.  Today's gains made technical indicators look strong in way they'd been avoiding until now.  Odds are increasing that we'll see further gains in the weeks ahead.  If that's not to be the case, we'll likely know very early next week.  If bond sellers haven't emerged in force by then, they'll probably be sitting on their hands for a while.