10-year yields down 1.7 bps to 1.615%
Aside from some modest strength in commodity currencies, owing to firmer risk sentiment, not much else is happening as the market counts down to the US retail sales report later.
Treasury yields are holding a little lower with 10-year yields seen down 1.7 bps to 1.615%. The soft bottom at around 1.60% is still holding this week and that is limiting any major reverberations across other asset classes for the time being.
As mentioned earlier in the week, bond sellers have had plenty of good reasons to extend the rout this year over the past two weeks (non-farm payrolls, ISM services report, PPI data, CPI data). Yet, Treasury yields are settling in the lower-end of the latest range.
That continues to reaffirm sentiment that it will take more consistent and upbeat data points in the months ahead before the market will actually start responding again; considering the Fed isn't just going to move based on 1-2 months of skewed data.
The consensus for the retail sales data today are already relatively strong but the actual readings may likely be even stronger, according to analyst estimates.
That may spark a knee-jerk reaction in yields and the dollar but ultimately it seems like we may settle back around current levels again until there is enough of such evidence of the US economy running hot and inflation spiking to nudge the Fed.
