Sentiment is building that the Fed may pause for a while after raising rates to 5 percent next month. That helps shorter-maturity debt, especially two-year notes.

He's been very clear. The Fed may take a pause for a month or two, but that doesn't mean it's the end of the rate hikes.

The conundrum is the Fed, and why the it keeps raising rates.

The Fed is going to finish at about 5 percent, or certainly pause at 5 percent.

The Fed is concerned that higher energy costs may give an adverse impact on growth rather than posing a risk to faster inflation. Producer prices also showed latent inflationary pressure eased.

The economic picture has not changed and it is still one that shows growth will be strong. The data we are seeing does not argue for a sustainable decline in yields.