Bond traders are hinting at caution ahead of the weekend
While European equities are posting more solid gains and US futures are up by ~0.2%, bond yields have fallen off in the past hour of trading with Treasury yields back at flat levels after having been about ~3 bps higher following euro area PMI data earlier.
At the time, I warned that the more upbeat risk mood warranted some caution and I'll repeat that again as we look towards North American trading now.
The fact of the situation is that as we approach the weekend, we have no idea how the situation surrounding the new coronavirus outbreak is going to develop.
Things may get worse from here before they get any better and if we see China and other countries take more drastic steps to try and contain the virus from spreading, that may have negative implications for tourism and the services sector globally.
That isn't something that risk trades will be too happy about and that will be a key risk to consider if you're planning to hold any trades into the weekend.
