Bond yields are keeping steadier for the time being. However, that could all change later in the day with a couple of key risk events on the agenda. 10-year Treasury yields remain in the spotlight, having run up against the key technical juncture here this week. Yields are holding just below that now at around 4.30%.
And that could precipitate a further rally in the bond market, if the conditions line up later. The mood in FX is not too perturbed just yet. But if anything else, watch this space.
A further breakdown in yields could lead to a drop in the dollar, with the recent USD/JPY recovery also questionable.
The two key hurdles today will be the ECB policy decision and the US weekly jobless claims.
The former is a more straightforward one as the ECB is to cut rates by 25 bps. It's then on how they want to position their language after. I wouldn't expect Lagarde to pre-commit to anything, reaffirming more data dependency.
As for the US data, we have seen some softer labour market numbers already this week. If that continues, it may well continue the moves that we saw yesterday in broader markets.
