10-year yields hold at three-year lows to start the session
Treasury yields are still sharply lower to start the week despite some retracement in risk sentiment seen in USD/JPY and US equity futures. 10-year yields are down by about 9 bps now to 1.446% but the same kind of drop is seen across the curve so far today.
I reckon this will continue to put pressure on yen pairs for a move to the downside in the sessions ahead but if anything else, it tells the story that the bond market is expecting the Fed to react accordingly to the recent trade developments.
At the end of Friday, Fed fund futures showed odds of a 50 bps rate cut in September to be at ~17%. Today, that now stands at ~29% already.
