There are still no clear answers on the inflation debate at the moment
The market is looking rather unremarkable for now and the key factor that is influencing that is arguably the bond market as Treasuries are continuing to show little conviction to do anything amid the debate on inflation.
Bond traders remain rather on the fence and unsettled and that sentiment is also reverberating across other asset classes for the most part as well.
10-year Treasury yields are keeping in and around 1.60% with little conviction to run lower with the floor being closer to 1.50% but lacking any poise to chase higher as well, with a ceiling closer to 1.70% and then 1.75%.
The latter in particular highlights that the Fed is still doing its job in keeping market expectations on inflation at bay. Policymakers continue to stick with the 'transitory' narrative, adding that they are looking towards labour market indicators as well.
That puts quite a bit of emphasis on this week's non-farm payrolls report on Friday.
However, I wouldn't expect that to change underlying developments in the market for now. Higher input cost inflation due to supply constraints is going to be a persistent issue for many months to follow, perhaps even until next year.
As much as that will arguably balance itself out once demand conditions return to being more normal, what and when exactly that will be considering the global virus situation is still a rather massive unknown for everyone in the market - not just policymakers.
Market participants are still looking towards a potential Jackson Hole pivot by the Fed so don't expect this middling tone in Treasuries to persist for too long in any case.