Bonds and stocks head in opposite directions
The bond and stock markets have sent vastly different signals today. The flight to the safety of bonds has reversed in a big way. The yield has risen 11 basis points today to wipe out the declines from Monday, Friday and most of Thursday.
Meanwhile, the stock market remains jittery and the S&P 500 is more than 20 points off the highs at 1921.
One way to explain the divergence would be expectations for Fed hikes but that's tough to believe given than Fed funds futures are only pricing in a 24% chance of a hike on Sept 17.
Overall, I think it's wiser to take indications from bonds here. If yields continued to rise, it spells more declines for EUR/USD and a larger rebound for USD/JPY.
