Bond Market More Worried About Growth Than Inflation

The economic data this morning was weaker than expected, and there was an inflation reading that showed a big jump. But bond investors don't seem too worried.

Q1 GDP game in at +1.3% (vs. +1.8% consensus), showing pretty slow growth. The inflation component of the report showed a big jump. But the bond market took it in stride. The yield on the 10-year Note remained steady at 4.68%. Inflation is normally a lagging indicator, so if the economy is slowing, you might expect inflation pressures to ease going forward.

MSFT reported very strong earnings last night, and the stock gapped +5% higher this morning. This is helping lift the Nasdaq, even while the S&P is lower.

Asian markets were lower overnight. The Dow has been up for 18 out of 20 sessions. This is quite a run. The Nasdaq has been up for 4 weeks in a row, a feat I haven't seen in quite a while. I expect the market to pause soon, and consolidate some of its recent gains.