We're not at fresh highs for 10-year yields in the US but just be wary of the levels we are seeing as we approach the end of the week. The high this year was at around 4.36% but during that week, the close itself saw yields slip back below the pivotal 4.30% mark. This time around, we could see the bond selling hold and secure a weekly close above that - which will be the first since 2007.
Despite all the talk about central banks pausing rate hikes and focusing on keeping rates higher for longer, the selling in Treasuries especially has been quite unrelenting since mid-July. I want to say that the waves of supply had some part to do with that but now with oil prices rising back above $90, perhaps inflation is starting to come back into the picture here.
In any case, what this means is that the correlation to USD/JPY is likely to keep the pair underpinned and right now, it is up 0.2% to 147.77 on the day. As for the dollar itself, it is marginally lower against the rest of the major currencies but if yields stay elevated, it is tough to really sustain a push against the greenback for long.
The only surprise for me has been equities, which have been rather resilient this week. But we'll see how investors really feel if yields are to hit fresh cycle highs to levels last seen all the way back in 2007.