US yields have cratered further in the wake of the very soft ISM report. US 10-year notes are at 2.73% from just above 2.80% prior to the data. This further undermines the like of USD/JPY and USD/CHF, which were already falling on safe-harbor demand for “hard currencies”.
As usual, markets interpret any soft US data as increasing the odds of more quantitative ease. Still a tough sell because of higher inflation but as Lockhart said last week, never say never.
