Treasury yields higher on the day

Treasury yields higher on the day

Yesterday's soft auction has led to a continuation of the selloff in bonds, pushing 30-year yields up to 1.98%, up 3 bps on the day.

Keep a close eye on these and 10s, which are challenging 1.20% again. With the climbing yields the dollar is strengthening across the board.

If we do see a break, the worry is that it sparks a negative feedback loop into stocks and risk trades, which would accelerate the drops in commodity currencies versus USD that we're seeing today. But I don't buy that thinking, especially on a measured, steady climb.

For USD/JPY though and even EUR/USD, we could see an extension of dollar strength.

The rise also makes it doubly important to watch the inflation expectation metrics in today's UMich survey. It looks like this week's CPI data and Powell's emphatic dismissal of inflation fears hasn't soothed nerves.