Maybe it's the lack of economic data on the calendar today, or maybe it's the Olympics but not much is moving in markets at the moment.
The linchpin is the bond market as rates jumped higher late last week after the ECB, BOE and non-farm payrolls report. There's no doubt in my mind that the bond market is the biggest bubble in history but how the air comes out (and when) will determine everything that happens in markets in the years ahead.
We're seeing some pressure at the long end today in the US and Germany. 30-year Treasury yields are back to flat on the day at 2.237% and German 30s are up to 0.402% from 0.390% at the lows. Neither has been particularly lively today.
The front end in the US has seen a drift lower in yields with US 2s slipping to 1.298% from a high of 1.328% in early trade.
In the middle, all eyes are on US 10s at 1.93% as they mount a challenge of 2% for the first time since August 2019.
BMO strategist think rates will continue to move higher but also outline the case for a less-dramatic move.
"At approximately five hikes priced in for 2022 investors have recalibrated monetary policy expectations to the official Fed guidance and the realities of the data cycle thus far. We’re certainly open to the risk that the real economy performs in such a manner as to warrant pricing in greater hikes, but with the Atlanta Fed’s GDPNow trackers currently indicating Q1 is on pace for just +0.1% in real GDP growth, the concern is that the FOMC’s hiking ambitions cannot (in practical terms) be limitless."
The lull in today's trading won't last, particularly on Thursday with the release of US CPI data.
