Buy on the rumor, sell on the news. That ancient bit of trading advice seems to describe last week’s data for Treasury yields. In the days leading up to Friday’s report on payrolls for April, the benchmark 10-year yield increased to a new year-to-date high on Wednesday, only to slump when the better-than-expected jobs report arrived. The conventional wisdom interprets April’s solid job gains as a convincing signal that the economy is rebounding after a weak first quarter. In turn, the upbeat outlook has renewed forecasts that the Fed will lift interest rates later this year. Maybe, although the Treasury market seems to be having second thoughts… again.

The 10-year yield closed on Friday (May 8) at 2.16%, down from Wednesday’s 2.25%–the highest since last December, based on Treasury.gov’s constant maturity data. But if the rise through last Wednesday was a sign of the market’s growing confidence in a Q2 revival, the conviction started to crack a bit on Thursday and Friday. A similar reversal describes trading action for the 2-year Treasury, which is widely considered as the most yield curve’s most sensitive spot for rate expectations. In fact, the 2-year yield remains well below its recent peak. If the crowd is confident that a rate hike is again a high-probability event for later this year, it’s not obvious in the 2-year yield, which hasn’t changed much from its mid-March levels.

The Treasury market’s implied inflation forecasts also made mild U-turns late last week. The implied inflation rate via 10-year Treasuries (based on the yield spread for the nominal less inflation-indexed Notes) dipped to 1.88% on Friday, down from as high as 1.94% earlier in the week.

Several days of trading hardly constitutes a trend and so we should be careful in reading too much into last week’s incremental yield reversal. Perhaps the latest dip is just a round of consolidating as the market prepares to raise rates in the coming weeks in anticipation of accelerating growth in the second quarter.