Good Tuesday morning. Yields continue to rise, even in the face of new inflation reports that tell us the Fed is nearing their 2% inflation target. In fact, they are likely already there.

First, Friday's report on core PCE (the Fed’s favorite inflation report) came in with a monthly change of just .14%. Annualized this puts core inflation at 1.68%. If we annualize core inflation over the past three months, it comes in at just 2.16%. This is the slowest rate of change in prices in three years.

Yesterday brought another important report that points to what should be the end of the Fed’s tightening cycle. Despite the recent spike in energy prices, the ISM Manufacturing Prices Paid index slumped to 43.6. Historically, this points to a headline inflation number of close to zero.

Finally, real yields now sit at 2.3% (with the 10 year at 4.72% this AM). Historically, when real yields are higher than 2% it has served as a fog horn signal that the Fed’s job is done.

Yet rates keep r...