The Fed certainly opened the floodgates this week and it perhaps isn't a coincidence that the rout in Treasuries is coming as the central bank put a stop to QE around the middle of the month. I mean, the size of the moves in bonds over the past few sessions are quite something.
It will be interesting to see how they may plan out QT when the time comes, as yield curve inversion fears are ramping up. But we'll leave that for when the Fed decides to communicate it.
For now, the rout in the bond market is still playing out and we are seeing 10-year Treasury yields hit 2.41% today - its highest since May 2019. The technical picture doesn't show much resistance to the breakout in yields but there might be a challenge to the long-term trend that is well worth watching:
The parallel channel that yields have been trapped within for the last three decades or so may be under threat and if 10-year yields push past the region around 2.50% to 2.60%, we could see some rethinking.
Going back to the present, the latest moves in the bond market are continuing to spur yen pairs to nudge higher with USD/JPY above 121.00 with buyers building further conviction for a potential run towards 125.00.
