A suspiciously synchronised Fed
|After peaking at 4.89% last week, the 10-year US Treasury yield retraced to an intraday low of 4.62% yesterday, pushing against the one-way ticket to 5 % that many had stamped.
The initial trigger for this reversal was the escalation of geopolitical tensions in the Middle East involving Hamas and Israel, which increased demand for safe-haven assets.
However, investor risk sentiment improved as confidence grew that the conflict would likely remain contained and not disrupt financial markets significantly.
Notably, the recovery in risk sentiment hasn't translated into higher US yields, indicating a degree of acceptance of the Federal Reserve's less hawkish turn.
While the market awaits the release of US PPI data and the Fed's meeting minutes today, recent dovish comments from Fed officials have been suspiciously synchronized; hence, US bond yields have continued to slide, suggesting recent Fed rhetoric is sinking in and will take precedence, over the meeting minutes.
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