The main event yesterday was supposed to be the US CPI data but instead, it served to tee up yet another poor Treasury auction and that set off another round of heavy selling in bonds. In case you missed the headlines:
- US September CPI +3.7% y/y versus +3.6% y/y expected
- Ugly Treasury auction sends the dollar even higher
That is certainly keeping traders on their toes after having seen the bond rout abate in each of the last three days this week before yesterday.
Right now, we're back to where we were before; that is worrying about a further rout in Treasuries. That helped to underpin the dollar yesterday and is something to look out for ahead of the weekend. USD/JPY especially is looking rather perky, hanging at 149.70 right now and just under the 150.00 mark - where the BOJ last intervened.
As we look towards European trading, 10-year yields in the US are slightly lower to 4.67% now (the high yesterday touched 4.72%). But as we have seen countless times in the past month, the selling in bonds tends to hit in US trading and that remains something to watch out for.
If you need some food for thought, Adam had a great post here on the matter: Why the signals from the bond market are truly terrifying