A hyper-sensitive market trained by central banks to pay excessive attention to the latest backward-looking inflation print was thrown into rally mode after CPI. The two-year yield dropped by about 12bps at first and then reined that in to a post-data rally of about 7bps and CAD depreciated by almost half a penny in the wake of the August readings. What the readings do is to take out pricing that was starting to lean toward something bigger than a 50bps move at the October 26th decision and bring it back to our call for 50. Some of that may also be wrong-footed positioning perhaps gone too far. Still, there is a lot ... (full story)