Fed and BOE tag-team the bond bears
Powell's comments about transitory inflation and the BOE surprise decision to hold rates today underscore that Team Transitory isn't done yet.
Aggressive moves to price in rate hikes in the US, UK and elsewhere are reversing today. That's led to major outperformance in the yen and a broad narrowing of the rate-differential trade.
US 2-year yields are a nice illustration of the retracement that's underway.
The drop in yields explains why stocks can be higher and a risk-sensitive pair like AUD/JPY can be lower.
