Welcome to the DC Today, your daily market synopsis of the Dividing Cafe, brought to you every Monday through Thursday to bring you up-to-date information and perspective on financial markets.

Well, hello and welcome to the Tuesday edition of DC Today. I picked a good day to have this be my last DC today for the day,

for the week rather. Brian Saitel will fill in for me tomorrow Wednesday as I am off to Dallas.

And actually, you know what? I think I am doing it Thursday back in California. So I take that back.

But I will be in Dallas tomorrow Wednesday and, and then back to California from Dallas, Thursday, doing D.C. today and then doing a div cafe on Friday.

And yet the reason I say today being a good day as the CPI report came out early this morning before the market opened,

and it gave the bond market the excuse to rally

that many feared the opposite could happen. And so it wasn't just merely that headline

inflation came in at 0% month over month. The CPI, both in core and headline, moved less than expected, both the month-over-month

data, but also what that meant for the year over a year.

And there was also a little building anxiety that not only would it not be better and expected,

but it could be worse than expected.

And so you did have, I think, a fair amount of today's equity market rally representing short covering,

where shorts had come on saying, what if the core number comes in at 0.4% instead of 0.3 expected.

And so they put some short positions on in anticipation of that.

It didn't happen.

And in fact, it came in at point two instead of point three expected.

And then that caused bond yields to drop nearly 20 basis points from the two year all the way up to the 10 year on the yield curve.

And that just resulted in a huge bond rally that turned into a huge equity rally.

And some of it must have been shorts getting their faces ripped off as we are prone to

say in my business.

Every sector was up on the day.

...