What’s the bond market saying here?
The July-August plunge in Treasury yields was understandable enough as the carry trade unwound, AI worries hit and shorts were squeezed.
That’s all faded away in other markets this week and yet yields are still falling. Yes, some of that is falling inflation as illustrated by today’s CPI report but that can’t be all.
We’ve seen some big bounces in equity markets but bonds aren’t on board with that thinking. My fear is that bonds are focused on slowing global growth indications. Even if the US economy isn’t as bad as feared, there is some real pain brewing globally as higher rates bite.
This article was written by Adam Button at www.forexlive.com.
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