Treasury yields stay on the retreat ahead of North American trading
10-year Treasury yields are down by nearly 7 bps to 1.521%
The drop sees 10-year yields fall to their lowest since last Thursday, backing off from a test of 1.60% yesterday. The retreat in yields is keeping risk assets more buoyed with European indices holding modest gains now as US futures keep higher.
- S&P 500 futures +1.0%
- Nasdaq futures +2.1%
- Dow futures +0.5%
- Russell 2000 futures +1.5%
Elsewhere, the dollar is staying more offered as EUR/USD extends gains to a session high of 1.1914 and GBP/USD testing 1.3900 on the session.
Commodity currencies are also benefiting with USD/CAD slipping back under 1.2600 and AUD/USD testing key near-term levels at 0.7719 currently.
I would argue it's too early to say that the bond rout has reached its limit for the time being considering that any modest retreat in yields could keep the Fed less incentivised to push back against recent market developments next week.
A lot will still ride on the Treasury auctions and ECB policy meeting this week as well.
If anything, this is likely just a mere taste of the kind of bond market volatility that investors will have to get used to moving forward. And the rest of the market will also have to be extra sensitive to how that volatility plays out surely.