10-year Treasury yields jumped 18 basis points on the release of the CPI report but ended the day up only 5 basis points. As noted above, this catalyzed the equity rally. However, the yield moved 17 basis points higher over the next four days to trade at new highs on the year.
Equities have thus far ignored this factor and remain about 6% above their low. It remains too early to tell if equities are poised to decouple from higher bond yields.
All tenors of fixed income beyond six months have yields above 4%. The market is now pricing in a 5% terminal Federal Funds Rate to be achieved in March of next year.