The stock market is poised for another day of strong risk aversion. Long bonds are selling off once again, pushing US 10s up 3 bps to 3.15% (though off the high of 3.20%).
Yet, unlike in recent days, the dollar isn't strong. The dollar index is at the lows of the day and it's cable leading the charge. That pair has been particularly risk-sensitive this year so it's an eyebrow-raiser.
Maybe it's some position squaring but I don't rule out that the FX market is flagging some risk appetite.
Alternatively, the Fed may be making some progress in convincing the market it doesn't need to hike so quickly and with such a high terminal rate (4% prices in), Or the market may sense that US economic weakness is coming.
Whatever it is, it bears close watching. When markets behave differently, change is happening.