Yields still lower but fright fades
The US bond market went into a full flight-to-safety mode earlier today in what looked like a gap in liquidity and near-breakdown of market functioning at one point.
Now that the dusk has settled, US Treasury yields are creeping back higher. From a low of 0.4885%, US 5-year notes are now yielding 0.606%.
The earlier intraday high of 0.6125% is now resistance. Yields may have put in an short-term bottom but I still don’t think cross-asset markets knows what to make of it. Stocks have been way behind the bond market on the virus but that’s not to say they can’t bounce with yields.
The dollar is the same story. USD/JPY is down from 110.00 two weeks ago but is that enough to account for 5-year yields down to 0.6% from 1.4%? I don’t think it is.