The bond market is one to watch as yields struggle to keep higher post-FOMC
10-year Treasury yields are down by nearly 3 bps now to 1.475% with the low today touching 1.467% as yields retrace further after the surge higher on Wednesday.
The push lower completely negates the jump post-FOMC as yields now slump back to levels seen going into the Fed meeting earlier in the week.
It is either inflation bets are dying off and we are seeing some position squaring in the meantime or that the market simply isn’t so committed to the Fed’s hawkish tilt.
I’d argue it is the former but the latter will likely see yields pick back up once the flush is completed. Either way, as soon as tapering signals start to become more evident, it is hard to challenge the narrative that the only direction for yields is up.
For now though, lower yields could temper with the dollar’s momentum despite the greenback threatening key technical breaks against major currencies.