Until the labor market very clearly cracks or the Fed and/or Treasury start buying bonds (the Fed via QE, Treasury via TGA), I believe the Fed has lost the ability to rhetorically manage the long end of the bond market by floating a pause or future rate cuts. Perversely, the only way for the Fed to regain control of the long-end is to ramp UP rate hike rhetoric in order to re-invert the curve1.
Unless NFP comes in cool tomorrow, this move in rates has legs up to the 2022 highs on 10s (424 vs. 417 currently) and 30s (438 vs. 429), and I continue to believe defensive sector underperformance confirms this.
