The front end didn't take it back

The two-year sat at 4.34%, unchanged, after Friday moved it 14bp in a session. The 30-year added 3bp to 5.25% and the ten 2bp to 4.75%. Three sessions last week the whole curve moved together and refused to change shape; Friday ended that, and Monday did not argue with it. 10s2s has gone 47bp, 39bp, 41bp. A market that spends a week declining to guess and then gets a number it doesn't like usually gives some back the next session. This one didn't.

Friday's speech withheld both forward guidance and a reaction function. What it added was a gauge — PCE, named as the thing he acts on — an unqualified ownership of the inflation record, and the judgement that financial conditions are "not restrictive." That last phrase is the one that moved the front end 14bp while the long end moved three. Nothing about a cut, and nothing that rules a hike out.

US forces struck two Iranian rocket launchers on Larak Island on Sunday, the first American military action in a month, after Revolutionary Guard units were seen preparing to fire rockets carrying sea mines into the strait. The Navy had finished clearing mines from the shipping lanes only last week. Iran returned fire overnight at US allies in the region. Crude rose about 2.5 to 3% on it, on Trading Economics figures — see the note below on why there is no number in the tape line.

The Dow fell 0.70%, the Nasdaq 100 rose 0.08%, and the S&P landed between them at −0.33%. The Russell gave up 0.54%. Nvidia added 1.48% to $220.78, recovering a third of Friday's 4.57% fall, and the semiconductor ETF 0.64%. The VIX rose 3.40% to 14.92, which is higher and still not high.

Marvell fell another 2.29% to $211.66, after Friday took 10.28% out of it. That is 12.3% across two sessions on a quarter that set a revenue record, grew data centre 46%, beat its own guide and raised the outlook for two fiscal years. The print was fine. The position going in was not, and a hawkish Friday is an expensive day to be long a name up 170% on the year.