Risk assets fade
Today's 2-year note auction was extremely strong with the yield coming in about 1.6 basis points lower than the market was anticipating. That highlights real-money demand for safe assets and genuine fear.
In turn, the entire curve has slipped lower after climbing earlier in the day. US 2s had risen to 2.2994% before the auction but are back to 2.2537%.
Similar dips of about 4 bps have hit across the curve.
That risk aversion has spilled into stock markets where the S&P 500 is up just 10 points after rising more than 30 at the highs. USD/JPY is down to 110.45 from 110.69.
The US sells 5-year and 7-year notes in the next two days. It will be critical to keep an eye on them for a hint about what's coming next.
