US 10-year yields reverse yesterday’s gain, dragging dollar down

The story of the week in the bond market was a trio of Treasury auction tails in 2s, 5s and 7s. That led to heavy selling across the curve and pushed yields above pre-CPI levels, raising questions about the path of interest rates and whether the bond market had confidence the Fed could get inflation under control.

Others pointed to month-end factors and the possibility of buying-the-dip in bonds.

The latter case got some ammunition today as US 10-year yields fell 8 bps to erased the Wednesday rise (though not the Tuesday climb).

With that the US dollar has retraced its Wednesday gains as well.

This article was written by Adam Button at www.forexlive.com.