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Bond yields look heavy ahead of key US data later

Daily chart of 10-year US Treasury yields (%)

The bond king’s final call earlier this month isn’t going very well so far. 10-year Treasury yields are down about 26 basis points in May so far, with the prospect of more big moves when we get to key US data later. The CPI report will be the one to watch, but there are also retail sales and the New York Fed manufacturing index released at the same time.

In this regard, bond buyers continue to remain firm, as they have been since the beginning of the month. 10-year yields are now down to 4.42%, close to falling to their lowest level in about five weeks.

From a technical perspective, we are heading towards a 200-day moving average (blue line) at ~4.33% currently. This will be something to watch when considering any redetermination of bond buyers, if current data favors their conviction.

Lower yields today are also causing USD/JPY to fall in European trading. The pair is down 0.5% at 155.70 currently, with the dollar also lagging across the board.

Risk trading is not yet on the rise, but other markets appear to be positioning themselves for a similar reaction to yesterday’s PPI data, at least for now.

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