• Gold up $19 to $2047
  • US 10-yaer yields down 3.4 bps to 3.94%
  • US 2-year yields down 11 bps to 4.15%
  • WTI crude oil up 77-cents to $72.72
  • S&P 500 up 4 points to 4783
  • JPY leads, EUR lags

The big question everyone is asking for the second day is: Why such a strong bid in two-years? Yields are down 25 bps since the post-CPI peak on Thursday with a near-relentless bid. There was some ammunition with a softer PPI number today and others are pointing to Yemen and the upcoming PCE report factors but that's a stretch.

Curiously, other markets didn't really buy into what was happening in bonds, sparking talk (unfounded so far as I can tell) that some kind of fund blowup might be behind the moves. The US dollar initially fell with yields, boosting the euro to 1.0986 -- a session high -- but it slowly backed off to 1.0949 last.

Most dollar trades followed a similar path of strength early in the day with a reversal as Europe closed up shop. Importantly, the US is closed on Monday so that could have created some lumpy flows.

As for Yemen, oil rallied to $75.25 early only to slide all the way back to $72.79 on steady selling in New York. That's typical of geopolitical events that don't truly touch on oil supply (though I acknowledge the risks). The US continues to say that it doesn't want a war.

Have a wonderful weekend.

FX news wrap Jan 12