UST Bond Yields Drop Amid Signs of Market Respite
The markets are showing signs of respite from the recent strong selling in fixed income markets. UST bond yields have dropped modestly, indicating a potential pause in the trend.
Yields are closely tied to crude oil prices, and Brent crude is currently down over 1% on reports of a possible agreement between the US and Iran on reopening the Strait of Hormuz. However, if credible reports emerge of progress towards a deal, it could have a more significant impact on oil and UST bond yields.
USD/JPY has been influenced by comments from Japanese Finance Minister Katayama, who revealed that President Trump expressed concern over yen weakness. This underlines the ongoing efforts in Tokyo to portray the efforts to stem yen weakness as a joint strategy with the US.
The Bank of Japan (BoJ) hiked interest rates last week and indicated more hikes are coming. The 2-year JGB yield is now trading near 2.00%. Global Markets Research's analysis suggests that USD/JPY may have turned, citing structural metrics that are starting to favor a sustained trend.