THE RATE PICTURE
US 10-year: 4.293% | holding post-PPI US 2-year: 3.792% | flat US 30-year: 4.898% | slight pressure 2s10s spread: +50bps | curve holding Fed Funds implied: 96.360 — market still pricing zero cuts through June despite soft print SPX Futures: 6,943 | +20.25 — equity market celebrating the miss WTI: $95.99 | -$3.09 — oil fading further Gold: $4,772.65 | +$32.34 — still elevated, not selling off on soft PPI
THE DESK READ
PPI came in soft. The equity market is buying it as a Fed cut signal. The bond market is not moving the way it should if that narrative were correct. The 10-year is holding at 4.29% — not rallying — while equities jump 20 points. Gold is still up $32. Oil is down $3. That three-way divergence is the signal. If the bond market believed the soft PPI story, the 10-year would be through 4.20% right now. It isn't. The bond market knows what comes next.
THE PPI NUMBERS — WHAT ACTUALLY PRINTED
PPI Final Demand MoM: 0.5% | consensus 1.1% | prior 0.7% — significant miss PPI Ex Food and Energy MoM: 0.1% | consensus 0.4% | prior 0.5% — even softer PPI Final Demand YoY: 4.0% | consensus 4.6% | prior 3.4% — still running hot annually PPI Ex Food and Energy YoY: 3.8% | prior 3.5% — core producer inflation accelerating year over year despite the monthly miss
The monthly miss is real. The annual acceleration is also real. Both things are true simultaneously and they tell different stories about the rate path.
NFIB Small Business Optimism: 95.8 | consensus 97.9 | prior 98.8 — missed badly, third consecutive decline
ADP Weekly Employment: 39,250k | prior 26,000k — labor market running significantly hotter than expected
THE ONE NUMBER
3.8% — PPI Ex Food and Energy YoY
The monthly number missed. The annual core producer inflation number accelerated from 3.5% to 3.8%. That is the number the Warsh Fed cannot ignore. Monthly volatility is noise. Annual acceleration in core producer prices while the Strait of Hormuz is blockaded is the structural signal. The April PPI — due in six weeks — will be the first honest read on what $95-100 oil actually does to producer prices. Today's print is March data. It predates the blockade.
THE BOND MARKET'S VERDICT
Three things should be happening right now if the soft PPI story were clean:
10-year yields should be falling. They are not. Gold should be selling off as inflation fears ease. It is not. Oil should be stable. It is falling — but for the wrong reason. Lower oil on a blockade is not disinflation. It is demand destruction fear.
The equity market is reading soft PPI as a green light. The bond market is reading the same data and sitting on its hands. That divergence is the five-signal framework playing out in real time this morning.
THE CALENDAR — WHAT MATTERS THIS WEEK
Today 8:30am — PPI printed. Soft monthly, hot annual. Watch 10-year reaction through the open.
Wednesday 04/15 — Fed Beige Book 2:00pm First anecdotal read on blockade transmission into real economic activity. Watch language around transportation costs and hiring. This is the qualitative data point the monthly PPI cannot capture.
Wednesday 04/15 — TIC Flows Foreign demand for US Treasuries. The most important number of the week given the petrodollar thesis. A decline in foreign Treasury demand the week after a US military blockade of a major oil corridor is not background noise. It is the structural thesis in the data.
Thursday 04/16 — Initial Jobless Claims | prior 209,500k ADP running hot this morning. If claims come in below 210k the labor market is genuinely tight and the Fed has no cover to cut regardless of soft PPI.
THE BOTTOM LINE
The equity market is up 20 points on a soft PPI print. The bond market is unmoved. Gold is holding all-time highs. The 10-year refuses to rally. ADP came in 50% above prior. NFIB missed badly for the third straight month.
This is not a clean inflation story. This is a diverging signal environment — the exact conditions that historically precede a credit repricing event. The bond market does not have the luxury of celebrating a monthly data miss when the annual trend is accelerating and a military blockade is running.
Watch the 10-year at 9:30. If it holds above 4.25% through the equity open, the bond market is telling you it does not believe the soft PPI narrative. If it breaks below 4.20%, the forced buyer dynamic is absorbing everything and the repricing is delayed.
The credit committee meeting is still running.
The Bond Bro Dispatch — Institutional fixed income analysis from an active CFA charterholder. Educational purposes only. Not investment advice. bondbrodispatch.beehiiv.com