The bond market sticks to the game plan ahead of the Fed next week
Bond yields climb higher with 10-year Treasury yields up over 4 bps now
There was a bit of a dip in yields yesterday after the ECB announced its stimulus package, which included the restart of QE, but that proved to be short-lived. The bond rally quickly ran into sellers and yields rebounded strongly before continuing the run higher today.
It has been a continued case of a run higher in yields throughout the past two weeks as the bond market retraces further the upside move in August, which brought yields to record lows in some quarters the world.
The Treasury market was not spared as we saw 30-year yields hit a record low well under 2.00% before rebounding back to 2.28% today. Here's a look at 10-year yields:
In August, yields fell by a whopping ~50 bps before recovering about ~30 bps in the past two weeks. The Fed decision next week will provide the next clues on what may come next (dot plots the one to watch) but ultimately in a world where central banks are looking to ease amid a global slowdown, there is only one direction forward in the long-run.
Much like everything else, this isn't the time to pick a bottom (or top if you're looking at yields) just yet but given the macro backdrop and outlook, this is but a buying opportunity for bonds (and also the Japanese yen) in the big picture surely.