US 10-year note yields are down 20 bp in yield since this time yesterday as Treasuries perform their usual flight-to-safety role. The move is extraordinary in that the market faces a wave of supply from the government next week when $63 bln in coupons will be auctioned. With unemployment seen rising and non-farm payrolls potentially having a 700 or 800 handle, dealers seem to not mind having a few bonds on board.
Softer yields are helping undermine the USD/JPY bid today, to some extent. Profit-taking has also been seen in that pair as well. This time of year, one often hears of Japanese repatriation of overseas holdings ahead of fiscal year-end at the end of March. So far we’ve not picked up even a whisper of repatriation this year.
US equities are down 4% at the moment and the dollar waffles in ranges. EUR/USD trades now at 1.2560. Many are sidelined until payrolls tomorrow.