There aren't many scheduled economic reports that are as hotly anticipated as was today's Consumer Price Index (CPI).  The market's reaction more than validated the anticipation.  What does all this mean for rates? Inflation is always an important consideration for interest rates.  Higher inflation means higher rates, all other things being equal and 2022 has seen the biggest spike in decades to the highest inflation levels since the 80s and the highest mortgage rates in at least 20 years. The market and consumers have been waiting for some sign of relief when it comes to rates.  Rates, in turn, have been waiting for some sign of relief on inflation.  CPI is the most heavily traded inflation report.  If there were only one place to receive an update on the fight against inflation each month, CPI would be it. For these reasons, it was no surprise that rates surged lower on November 10th when CPI finally suggested a meaningful shift toward lower inflation levels.  But that was only one report and we'd seen another false start a few months prior that cautioned against early celebration.  And so it fell to today's CPI data to confirm or reject the case presented back on November 10th. By coming in lower than the November 10th data and also lower than the median economist's forecast, the confirmation was essentially provided, thus paving the way for today's sharp drop in rates. There are a few "yeah buts."  The first is/was that the improvement versus the previous month and the forecast was only one tenth of one percent in monthly terms--perhaps not compelling enough to put the inflation anxiety to bed.  The second is that the market still has one other big hurdle to clear this week in the form of tomorrow's Fed announcement.