US 10-year yields are up 10.5 basis points today and testing the late-January high. There has been a massive turnaround this week to 1.92% from 1.64%.
US 10 year yields
We wrote about rumors of asset rotation on Tuesday.
There is talk that various funds who had large bond allocations started to get cold feet after the huge move higher in January and wanted to close the positions and buy US stocks instead.
In the eurodollar market, the June 2016 contract is down 30 ticks today. That correlates to about 17 basis points of hiking that wasn’t there yesterday, or about three-quarters of a rate hike.
For FX, higher Treasury yields are good news for the US dollar as they will make it wildly attractive compared to AAA-rated German bunds yielding 0.375% or Japan at 0.339%. Even Canadian 10s yield just 1.42%.
