The technical break continues to run as 10-year Treasury yields now hit 1.84% and is at the highest since January 2020.

US10Y W1 18-01

That now sees yields move back above its 200-day moving average (blue line) and could be heading towards the November to December 2019 highs around 1.96%. That alongside the 2% psychological level will be key to watch in case of any further upside.

I outlined at the end of last year that:

"The market consensus for now seems to be 10-year yields trending towards 1.8% to 2.0%. That's entirely fair if economic expectations and the inflation/Fed outlook plays out as it should. But a lot of that hinges on pandemic-related developments and how much the Fed will stick to its word."

We're already seeing yields fall into the target region and I fear that the selloff in bonds may be one that is going a bit too far, too fast. If you remember last year, we saw yields surge from January to March only to stall thereafter and meander through to August. I fear we could see a similar kind of scenario play out in the opening months this year.

That said, it all depends on the Fed and the inflation outlook. For now, there is still nothing to refute the many rate hikes that will follow and the thought of inflation falling back down rapidly. So, there's that.

As for what higher yields are doing today, it is weighing on equities especially tech stocks once again. Nasdaq futures are down 0.9% and S&P 500 futures down 0.5%. That is all weighing on the risk mood slightly and keeping the dollar in a decent spot ahead of European trading.