• Gold down $3 to $1954
  • US 10-year yields up 14 bps to 2.48%
  • WTI crude oil up 69-cents to $112.97
  • S&P 500 up 20 points to 4540
  • CHF and CAD lead, JPY lags

Europe and Asia handed off a relatively quiet day to North American trading but it wouldn't stay that way for long. Once again it was the bond market that kicked things off. Oil reversed a loss to add to inflationary pressure but it seemed to be a note from Citigroup calling for four 50 bps hikes this year that got things moving; BAML offered up something similar as well.

There's no one who wants to catch the falling knife in bonds and yields rose dramatically, led by the belly. That pushed 3s10s into inversion along with several other spots along the curve.

US yield curve

Other countries weren't even close to matching the bond moves except for Canada and it was the loonie that was the star performer of the session, breaking 1.2500 and continuing down to 1.2468 in what will be the lowest close of the year and just a handful of pips away from the intraday lows of the year at 1.2450.

Yen crosses continue to soar in spectacular fashion. AUD/JPY is flirting with a flat finish today but this will be 8 weeks in a row of gains and this week was the largest yet. It was CAD/JPY that got the most traction today as energy prices rose, led by natural gas.

What explains the resilience in stocks? The latest theory is that the market is comforted by the Fed confronting higher inflation. The thinking is that a 50 bps hike and/or more after that will ensure that inflation stays contained and the long-term trend of low inflation and borrowing costs -- even if it comes with lower growth -- will persist. Others point to flows and quarter end.

The euro finished the day slightly lower. It had pushed higher in Asia, hitting 1.1037 but it was dragged back to 1.0982 on USD strength.

Cable was hit by a quick round of buying up to 1.3220 to match the Asian high but couldn't get through and then sellers arrived to knock it back to 1.3187, which is unchanged on the day.

The action remains in USD/JPY, which was bid up to 122.25 from 121.75 but unable to get above yesterday's highs at 122.39, despite the jump in yields. That will be something to watch in Tokyo trade on Monday.

Reminder: UK clocks move ahead one hour on the weekend.