The big story in markets has been the surging rally in stocks on Nvidia yesterday. That has stolen the spotlight but let's not forget about the other moving parts in play. So far this year, the bond market is one of those key components and it will once again be a focus point as the weekend approaches.

US Treasury 10-year yields (%) daily chart

With Japan out today, Treasuries will only be active later once we get into European trading. But 10-year yields are starting to move towards a key technical level after trading yesterday. Yields are now contesting a potential break of the 100-day moving average (purple line) and that could lead to another leg higher.

The key detail since last week was the break of the range between 3.80% and 4.20%. Since then, yields have been held back by the 100-day moving average. So, are we starting to see that crack with bonds set to fall further this year?

As things stand, traders are now pricing in just 78 bps worth of rate cuts by the Fed for 2024. That is way down compared to the 156 bps priced in at the end of December. We've exactly halved that coming with odds of a June rate cut not even fully priced in (~74%).

That being said, it seems like traders and the Fed are reaching a sort of consensus or aligning point. In all likelihood, the first rate cut should be delivered in June at the earliest. And there should be around three 25 bps rate cuts in total for the year.

In that sense, the correction in the rates market looks to have run its course. But if anything else, I'd argue that you can't always rule out a further technical squeeze. And that is precisely what we might still see happen in the bond market in the short-term moving forward.