Yields lower this week but not dramatically
Most traders I know have the same regret this summer: Not listening to what the bnd market as saying at the end of June when yields sank.
There was an immense amount of head-scratching about it because at that point, delta was just another variant. There was all kind of talk about technical factors and flows but in the end if was another example of the bond market being way ahead of the curve.
So what now?
Looking at 10s there was a double bottom at 1.13% and a sharp rise from that until this week, when there was a decent give-back down to 1.24%.
What we aren't seeing is a break to the kinds of new lows we're seeing in yen crosses.
Maybe that's US-centric though as we wait for next Friday's speech from Powell. Through I would be tempted to argue that the bond market is more worried about the potential Fed policy error of hiking too soon and killing the reflationary impulse than of inflation itself. The playbook lately is that a hawkish Fed pushes down yields on that thinking.
Taken as a risk proxy though, 10s don't look entirely healthy but they don't look anywhere near as bad as some other markets. But looking at the chart, I can sympathize with those who are fearful of a breakdown to 1.00%.
