There isn't much else that needs to be said as markets are looking rather pensive awaiting the US CPI data later today.

While risk trades and the dollar are key focus areas surely to be impacted by the release, it is best to be wary that the bond market remains a key spot to watch in trading this week as well.


The pull higher in 10-year Treasury yields since the whole US-China drama last week is being limited closer to the 100-day moving average (red line) and that is the key technical level to be mindful of this week.

If we do see an upside surprise in inflation figures or if the market disses the Fed pivot once again, any push higher in yields will have to break the level mentioned in order to convince of a return to 3% again.

It's been tough to try and decipher all the moving parts since the Fed switched to being more data dependent. In one way, the data allows for more clarity as to what is going to be guiding the Fed outlook. However, what the data means at the end of the day is still subjective and it isn't so much what the market thinks that matters. It is what the Fed thinks about it that matters most. A case in point is the US Q2 GDP release, which produced the whole recession debate.

In any case, keep an eye on the bond market at these levels because it is going to have a notable impact on how USD/JPY is going to trade later in the week. If yields does chase a move higher, then we could see the pair look towards a more material leg higher above 135.00 again; vice versa.