Capitulation ends early...

I thought the capitulation trade would last a little bit longer, pushing the 10-year through 4.50%. We've backed up 10bps since then. Since the capitulation was incomplete (in my opinion), the backup should short-circuit at some point, because those who wanted in before will be happy to get in at cheaper levels.

Where we go from there will depend on the data. I still think we need seriously negative economic data to sustain this rally. FF futures now look like a lock for a cut sometime between now and May. It will take more than that to prevent the 10-year from selling off.