Treasury Yields Reach New Milestones as Risk-Off Mood Weighs on Currencies

US Treasury yields have reached new milestones, reaching their highest levels since 2007 and 2002 for the 10-year and 30-year rates respectively. The 10-year rate traded at 5.29% overnight, while the 30-year rate was at 5.62%. This has weighed on US equities, with modest declines in major indices.

The risk-off mood has seen the New Zealand dollar (NZD) and Australian dollar (AUD) underperform, as weaker risk sentiment supports the US dollar (USD). The NZD is currently testing fresh year-to-date lows around 0.5626, while the AUD fell to 0.6970 after yesterday's Reserve Bank of Australia (RBA) update.

Oil prices are modestly lower, following the restoration of half the capacity of Saudi Arabia's East-West pipeline and an increase in flows through the Strait of Hormuz amid fewer attacks by Iran. The US Department of Energy said it would offer up to 40m barrels from the Strategic Petroleum Reserve, which would reduce the reserve to its lowest level since 1982.

European rates have not kept pace with US rates, with German and UK 10-year government bond yields slightly lower on the day. France's 10-year yield was up 4bps, while the France-Germany spread widened further to 119bps, its highest level in 14 years.