At some point early next week, the 10-yr UST should test 2.395% again. The failure this week to surpass 2.425%, however, will still be memory fresh so it might take a couple of days. The middle of month falls short of any hot bond catalysts after today, possibly keeping volume on the low side until traders can get a better sense of what’s really happening with the US economy. We’re not talking about retail sales, but two blah months for CPI cannot be jammed into any existing bond market theme except to dismiss them both as statistical errors. Result: A 7bp rally. In one sense, the reaction today to a moderate miss makes up for the market’s unwillingness to trade March CPI because it was released on a market holiday. FTN’s new model of 10-yr CPI expectations has a math component for headline/core spreads, and that math nailed the market’s reaction today (it has missed in some months, though. The goal is to capture market sentiment). Despite today’s startling rally, investors are still puzzled how to forecast the impact of declining Fed QE holdings on rates at the end of this year. Every day brings another article on the topic. This week’s FTN contribution puts the Fed’s QE in a global context, suggesting what the ECB does between now and the end of 2018 might be more important to US rates than the Treasury’s response to the Fed’s decisions. The rate issues are complicated, but we start with easy (and colorful) charts that we’ve not seen applied to the topic. The GSEs have been in the news the latter part of this week. We returned to last week to produce estimates of Fannie Mae’s business metrics on its all-important single-family guarantee business. It no longer breaks them out separately, so we do it for you.