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Treasury yields reached multi-year highs on Thursday, a move that looks decisive. The complication is the context: traders are largely holding position ahead of U.S.
wholesale inflation figures, which means the climb may be a setup rather than a conviction trade. The case for the move is readable.
Yields at multi-year highs carry an embedded expectation, and traders positioning before a wholesale inflation release are signaling they think the data could confirm that inflation pressure holds.
That view may already be consensus. When markets price an aggressive inflation expectation into a data event, the number has to clear a high bar to extend the move.
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