US 10-year yields are threatening to break 3.50% for the first time since December 19 as the bid for safety returns in light of Friday's weak ISM services print.
Yields rose in early US trade today but have since reversed and 10-year notes are now down 6.1 bps to 3.510%. If the figure breaks, the next low in focus will be the December bottom at 3.40%.
The ongoing decline in US yields is narrowing the global gap. German 10s pay 2.23% while Japanese 10s are at 0.50% after the BOJ's recent shift in yield curve control. US Treasuries are now trading below comparable gilts, which are at 3.53%.
The narrowing spreads are adding to the weight on the US dollar today. There's a a broad selloff that's sent the US dollar index to the lowest since June in a reversal of a year-end pop.
