Treasury yields press higher as NFP dip wiped out.
When 'something' happens in the bond market, every other asset class needs to perk up. It's more clear than ever that heavy selling is underway in Treasuries.
The obvious catalyst is the idea that the Fed will hike but the move started in Germany as Bund yields approached zero. They've turned around in dramatic fashion and are trading at 0.61%, up 6 bps today.
But the bigger move today is in Treasuries with 10-year yields up 9 bps to 2.24%. The low last week was at 2.10% after non-farm payrolls on Friday but it immediately became clear there were sellers waiting in the wings. They continue to sell even with stock markets hit by modest risk aversion (S&P 500 down 6 bps). That relationship may continue so long as its bonds leading the move. The last leg higher in the S&P 500 -- I believe -- was driven entirely by buybacks fuelled by cheap rates.
US 10-year yields
To me, this move is beginning to look like it will last. If so, that's good news for the dollar but only if Treasury yields rise faster than sovereigns elsewhere. If they move in tandem, the euro will benefit more because so many carry trades are funded in euros. The loser -- like we see today -- may continue to be the kiwi.
