10-year Treasury yields are down to their lowest level since 9 March
The bond market is waking up from its slumber since April and it is not going unnoticed in the market. The move also coincides with the Fed giving the green light for rates to keep lower for longer this week, as we see 5-year yields hit fresh record lows as well.
10-year yields are now down to 0.52% and that is the lowest level since 9 March.
In the context of major currencies, this adds to more reason why the Japanese yen will keep firmer and USD/JPY sellers will gather more conviction to keep a break under the 105.00 handle - even prompting Japanese officials to begin their jawboning earlier today.
The seasonal pattern in August also reaffirms the conviction above, although one can also point towards worsening domestic conditions in Japan as a reason to underpin the current momentum; with the virus situation worsening in the country.
As for Treasury yields in general, it is all about the Fed communication and right now the narrative is that low rates are here to stay as the economic recovery is under threat - not to much surprise considering the virus situation in the US.
If 10-year yields start chasing for a push towards the 9 March low 0.31%, that will continue to keep a tailwind behind the yen and may feed to more defensive risk tones in the market as the bond market is starting to play its role once again.
In the bigger picture, this is but another space that should help to bolster the narrative in gold as real rates/yields continue to sink further into negative territory.
