US equities are making new lows however bonds have circled.
Ten-year Treasury yields touched the very best since Might earlier right now at 4.50% however have since circled and at the moment are down 1.6 bps on the day to 4.40%.
US 10s, hourly
That is a strong rejection however the subsequent hurdle is yesterday’s low. A drop under that may finish a collection of upper lows and if it comes with extra fairness promoting it may very well be a part of a broader flight to security.
USD/JPY may also key off of yields and will additional retrace if this transfer continues.
Apparently, the massive bounce in yields began after the Fed minimize 50 bps and now the flip decrease is coinciding with Powell saying the FOMC is in no hurry to chop charges. Different officers have taken an identical less-dovish tone.
The considering within the bonds market is about that response perform. When the Fed minimize 50 bps it minimize tail dangers round a recession and added to inflation dangers, notably after waves of robust knowledge following the minimize.
In distinction, the Fed pausing now would work to squash inflation and curb development.
So there’s a little bit of a dance happening right here that is price keeping track of.
