The 30-year Treasury is now up 1 21/32nds and its yield is down by 8 basis points to 2.78%. Most of that decline came in the inflation premium embedded in bond yields, down 6 basis points. That brings the 30-year Treasury yield down to the lowest level since the day after the November presidential election (Nov. 9), when it jumped 23 basis points.

The Federal Reserve is flummoxed; rather than a steady path of normalization of interest rates, it faces a confusing and treacherous course ahead. The Euro, meanwhile, is back to the highest level since last Oct. 5, after jumping 0.75% on this morning’s weak inflation and retail sales data in the US. Germany’s stock market, up more than 1% before the US data release, is now up just half a percent in response to the soaring Euro.

The fact that US interest rates and the dollar are back to levels not seen since Trump was elected could portend a nasty shift in economic expectations to the downside in the US. The consensus forecast for 2nd quarter US GDP growth now stands at 3%, but the result now seems likely to be closer to 2%, following on the first quarter’s disappointing 1.2%.