US 10-year yields have fallen 4 basis points in the past hour to 2.48%. Earlier in US trading, they touched as high as 2.55%.
I suspect fund liquidations ran their course in the morning and now bond funds are buying in anticipation of a rally in the month ahead as the Fed stays on the sidelines. In the past two weeks, bond yields haven’t correlated particularly well with FX so there is no simple takeaway but if yields fall on diminished expectations of tapering, it will weigh on the dollar.
