Bonds are in charge of the market.
Rising yields yesterday caused risk aversion and the retracement today caused a rebound. The dollar, stocks and even commodities are along for the ride.
The mood looked like it might be upended again after today's three-year US Treasury note auction was soft. The yield was 1.1 basis points above what the market was looking for. That led to a broad selloff across the curve and infected other markets.
But the price action quickly reversed and now yields are back near the lows of the day. Here's an intraday chart of 10s.
This looks like a fresh greenlight to sell the US dollar and buy risk assets but it's a trade that needs to be monitored carefully.
