Rates continue to fall
Treasury yields are 4-8 basis points lower across the curve in a flattener that's threatening to be an inverter. US 2s are at 1.54% compared to 10s at 1.62%. That's the narrowest since 2s10s were inverted in 2007.
Luke Kawa highlights that this is the largest five-day drop in 10-year yields since the 2011 debt ceiling fiasco. Rates are at the lowest since October 2016, when Fed funds were much lower.
What's especially notable is that yields didn't even tick up yesterday as stocks rebounded. Now with central banks cutting in New Zealand, Thailand and India, the market is getting the sense that it's all coming apart. S&P 500 futures had been higher only minutes ago but are now pointing to a 20-point loss at the open.
The event to watch is the Fed's Evans at 1330 GMT. If he takes the same wait-and-see approach as Bullard then the market will start kicking and screaming.
In terms of the bond market, there is still some breathing room but the all-time low in 30-year yields was 2.089%. We're at 2.16% now.
