US 2-year yields are now down 12.2 basis points on the day to 3.39%. The easy explanation is that the fall in the unemployment rate in the jobs report along with a slight miss on wage growth is dovish.
But to me that's a stretch. I think the important context is the rise in yields since the start of the week. We closed last week at 3.39% and yields hit 3.55% yesterday. Nothing really changed in that time though the market was still probably digesting the Jackson Hole speech.
What I do see is the market struggling with where the terminal top lands. A 75 bps hike now could mean a lower top and we're seeing some of that. After flirting with +4% this week, the market has eased back to the 3.75-4.00% range.
I also wonder of technical and flow factors were in play through the turn of the calendar. There was a 'sell everything' mode for a few days and that may be a hint of fund redemptions or something else unrelated to fundamentals.
