EUR/USD at the lows of the day
EUR/USD continues to drift lower as the US dollar holds a big bid to start the month. The pair is down 47 pips to 1.1814, which is just off last week's low of 1.1807. That will act as support for now.
The fall in sovereign yields isn't just a US story. German bund yields are down 6 bps to -0.268% and nearing the June low.
The divergence between the inflation talk throughout markets and falling bond yields is stark. It's tough to bet against the bond market but what makes me pause is that if inflation doesn't come, then it will simply be a green light for governments to spend more. I don't see that paradigm changing until there is some real inflation.
