As you surely know by now, the minutes of the March 22 FOMC meeting hit the streets today, and the new wisdom is that the Committee is not feeling quite as hawkish as people were thinking. From Briefing.com:
Market Blasts Higher on What Was Not Said: The market took the lack of pumped-up inflationary rhetoric in the FOMC minutes and used it for a boost, pushing yields on the 10-yrs to 4.346% and allowing the 5-yrs an 11.5 basis point run. The market had been geared up and positioned well short heading into what was looking to be "a brutally hawkish commentary." Did not happen. Others had expected little change to come from the release, as the policy-makers had already tipped their hand as far as inflation concerns were concerned. Once the bonds got rolling they plowed through technical levels looking to squeeze any further weak shorts as well as sniffing around for the mortgage-players, who are suspected to be lurking near 4.25% area and were also positioned for more words of pending inflation woe. Key inflation-related comments ... "pressures on prices stemming from labor costs seemed well contained and were expected to remain damped in coming quarters."