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Yields Decline on Volatility and Fedspeak

Tumultuous equity markets, slumping oil prices, and comments from FOMC members all contributed to a sizable decline in bond yields this week.  Yields are now back within range of October's lows, as the 10-year note has shed nearly 20 bps of yield over the past ten days. 

The week's labor market and retail sales indicators were strong while October's inflation readings matched expectations.  Despite this, the bond market took its lead initially from stocks, as yields fell in concert with the S&P 500 early in the week.  Yields fell once again on Friday, as Fed Governor Richard Clarida stated that the FOMC has to include the slowing global economy as a factor in their rate-setting process. 

His comments, as well as similar ones from Chair Powell earlier in the week, caused traders to significantly lower their forecast for 2019 Fed rate hikes.  This comes despite no overt statement from any policy maker that the Fed intends on slowing their pace of tightening monetary policy.

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