Slack in the labor market has been the Fed’s primary focus and its reason for not fearing an inflation out-break any time in the foreseeable future. Today’s data certainly gives their stance some added credibility.
US yields continue to ease as the market sees the Fed maintaining rates at unusually low levels for a considerable period, just like they told us at the last FOMC.
2-year nots at trading at a 0.95% yield and 10s have eased more modestly, to 3.84%.
USD/JPY should struggle as long as yields continue to ease. It is finding bids now in the 92.30/40 area. 0.9205 is key support–large stops lie below.
