The 2yr yield is inverted to emphasize value rather than yield. The untethering of the DXY from the treasuries are something to watch.
There's a lot to see here. Im viewing it from the lenses of liquidity and solvency.
This is developing. The purpose of this post is to serve as a repository of notes along the way regarding this topic.
DXY shows relative strength of the dollar. But the bonds sell off seems to show it as contextually weak albeit stronger (and in this case the most liquid). I would view this more as a moment of underperforming by the least in a group of underperformers rather than outright comparative outperformance.
Notable Events since the 6/10 CPI print
Yield curve inversion along multiple points of the curve as the short end yields higher than the long end
75 bps being priced in, market wide, some stating as early as this Wednesday's announcement for June. Consensus give 95% probability for July. ~175bps being priced in with high probablility to september.
ECB Fragmentation is popping up with increased frequency in the 10y sovereigns. Draghi's "whatever it takes" comments see the Italian 10yr sell off at a rate leading the euro area sell offs.
In the beginnings of the overnight session South Korea warns "The financial markets and economy are in critical condition." President Yoon: " The government intends to use all supply-side tools to keep inflation under control" - Yonhap
Meanwhile the BoJ amidst zero-bid scenarios on their 10y sovereigns and declares a backstop bid of 800bln yen at the next auction. The lack of liquidity in its bonds is causing havoc to the Yen. BoJ is expected to step in to defend the currency. This may have implications on its regional emerging market peers.
See Further Comments for updates.
הערה
'Regime change' in the bond markets seen to consolidate as the short end forces the long end upwards.
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