GOOD MORNING! The strong rally in Treasuries since May 1st stalled on Thursday after April’s import prices came in higher than expected. Import prices historically have a good correlation with inflation. Fed speakers continued with their patience theme and keep rates at a restrictive level until they get confidence that inflation is moving back down. The report and comments provided an excuse for the tekkies and line-drawing gnomes to sell as the yields on each on-the-run benchmark maturities were at or near their 200-day moving average, i.e., resistance. Also used as an excuse was that the oil futures contract was up more than 1% week-to-date and a short-squeeze in copper futures kept the industrial metal near its highest level in over 2 years. The benchmark equity indices followed suit to Treasuries and gave up their gains in late session and posted small losses. The Dow couldn’t hold on above the 40,000 level and the S&P slipped back under 5300.
      Stock index futures and Treasuries are taking a breather in early morning trading. There are some more talking Fedheads today and just one economic release, the Conference Board’s Leading Economic Indicator. This data point usually doesn’t get much reaction out of the markets since most of the components that make it up are already public and it is subject to revisions. Only we can dare ask how it can be leading when the past can be revised.