Rates higher across the curve
The belly of the curve is leading the way again today with US 5s up 7 basis points to 1.19%. That's the highest since the pandemic got underway.
It's not a consistent picture in the yield curve with 2s up 4 bps then 5y and 7y yields up 6-7 bps. It moderates from there with 30-year bonds flat.
That paints a picture (at the risk of reading too much into it) of the Fed moving sooner and more aggressively but ultimately snuffing out inflation at too-low rates.
Fed implied probabilties show that a Fed hike next July is now more likely than not, at about 60% with a decent chance of two hikes by then. A month ago, there was an 85% chance of no hike.
The other likely driver today is energy. Oil is up another 1.6% today after 8 straight weeks of gains. The surge in metals also continues.
The move in bonds is beginning to spill over to USD/JPY, which has quickly recouped the dip a short time ago. Stock futures are also losing some ground.
