The bond market remains a major focus point towards the end of the week

Earlier in the week, end-of-month flows made it difficult to read market movements. Bonds were on offer in Europe before they strangely fell in US trade, but as it was sidelined by Fed Chair Powell’s less unusual remarks, it was enough to push bonds higher (below yields) in recent sessions. The size of the change is quite significant, as the 2-year Treasury yield falls further to .20%, a two-month low. Adam posted some musings here yesterday. US2Y At the same time, we saw the 10-year Treasury yield fall to 3.50% and is close to its 100-day moving average of 3. 8%: US10Y In other words, important technical levels are coming in the bond market now. If the rally continues higher after today’s US jobs report, it will certainly spell more trouble for the dollar – especially if 10-year yields fall below key levels. On the other hand, with USD/JPY already testing below the 200-day moving average as noted here, 130.00 could be the next quick rally if things align with the bond market.

Steve Walker

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