There is a major disconnect in the bond market: 2-year Treasury yields were barely moved, but 2-year and 5-year TIPS yields fell dramatically, and market-implied inflation expectations (e.g., 2-year inflation swaps) rose about 5 basis points. TIPS yields typically fall on concerns about high inflation or weak growth. The current move, with rising inflation swaps, indicates the market is pricing in higher inflation risk primarily through the inflation-linked market, not through expectations of Fed rate hikes. WATCH this dislocation as a signal of how the market is digesting the stagflationary shock of high oil prices. It highlights a specific pocket of market stress (inflation-linked bonds) that may not be apparent in nominal yields. If oil prices quickly recede and growth data remains robust, the inflation scare could fade, causing TIPS yields to normalize and the disconnect with nominal Treasuries to close.