The front end is leading the way in a broad bid in the bond market.
There's a certain amount of reflexivity in cross asset markets. When the picture in equities gets bad enough, the +2.5% yields in bonds start to look good. Then that helps to stabilize stocks and the selling resumes in bonds. It's a vicious cycle that's being perpetrated by deleveraging and the lack of Fed buying in bonds.
At some point, you have to wonder if slowing growth is enough to limit Fed hikes to 2.5-3.0% rather than the 4% that's nearly priced in. That would ultimately cap the pain but aside from the odd intraday bid in bonds in a stock market rout, there isn't much to underpin the idea we're there yet.
For now though, US 2s are down to 2.60% from a high of 2.75%. Yields are now negative on the day across the curve.
