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As the bond market starts to turn around today, the question on everyone's lips now is whether or not the short squeeze has finally ran its course. It is still too early to say what this latest bounce really means but as always, keep an eye on the charts.

USD/JPY is trading back to 110.00 now as yields track higher while the rest of the market is keeping more sanguine ahead of European trading.

I'm still sitting on the view that the market isn't so much so that wrongfooted when it comes to pricing in the latest developments on inflation and central bank rhetoric.

Sure, there is the risk the delta variant poses but as evident with the second string of lockdowns, it isn't as hurtful or harmful as what we saw last year. Adding to that, vaccinations will ensure any economic major setback is likely to be contained.

There are reasons to be cautious but to say that it completely derails the argument built over the past six months, I don't think we're quite there.

That said, this 1H 2021 narrative was perhaps supposed to be shelved for 2H 2021 but it already came many months earlier than estimated. So, make what you will of the latest squeeze in bonds and if the bounce so far today means anything at all.

What are your views on the market right now? Share your thoughts/ideas with the ForexLive community here.