The rout in stocks and USD/JPY on Monday was foreshadowed by the declines in Treasury yields a day earlier. But when stocks and USD/JPY rebounded, the bond market barely followed. Today, yields have turned back lower with 10s down 5 basis points to 2.84%, narrowly above the January low of 2.8165%.
It might not be the warning signal it looks like. Due to the outperformance of stocks and sagging bond performance last year, portfolio managers are forced to rebalance and that could be keeping downward pressure on yields.
