Bond yields got off to a hot start earlier in the day but have pulled back considerably in the last hour or so. 10-year Treasury yields are now flat around 1.77% after hitting a two-year high just above 1.80% earlier.

In turn, that has seen USD/JPY also pull back on the session from 115.60 levels to 115.30 at the moment.

Going back to the 10-year yields chart, we are seeing some resistance around the 200-week moving average near 1.79% and that adds to the psychological level of 1.80% perhaps. Keep an eye on that as the next trigger for any leg higher in yields.

As for what is bringing about the latest pullback, perhaps it is just some positioning play and profit-taking after the run last week. Some food for thought from earlier as well:

"There's a good argument for yields to trend higher this year but it is all coming rather quickly in the opening week or so. I fear that the selloff is getting a bit too ahead of itself and things may stall for a period of time in the months ahead.

With inflation at present levels, the key threshold isn't so much the Fed hiking to 1%. It is more so trying to tinker around and getting that 1% to 2%. That is unlikely unless the present high inflation pressures show so no signs of cooling by next year."