- US Treasury yields rebound from a five-month low, snap three-day downtrend.
- Covid strains seem to spread faster in the West, Asia-Pacific keeps struggling with the virus.
- Vaccine news offers little solace amid a quiet session.
The coronavirus (COVID-19) woes favor the US Treasury yield rebound as the traders seek fewer clues of the Fed’s next moves in recent days.
That said, the 10-year Treasury yield regains 1.31%, up 2.6 basis points (bps) while the 30-year counterpart jumps back from early February levels to 1.94%, adding three bps by the press time.
Although Aussie Prime Minister Scott Morrison changed his stance over the AstraZeneca vaccine, also pushed people to take early jabs of Pfizer, Australia’s covid infections jumped to three days high on July 08. On the other hand, UK refreshed the six-month high of the virus cases, unfortunately, whereas the numbers as grim for Indonesia, South Korea and Thailand.
The virus woes pose serious challenges to the economic recovery hopes and do favor the need for further easy money policies. However, traders seemed to have been less interested in the central bank chatters of late. Recently, the ECB showed readiness to alter inflation targets whereas the polls suggesting BOC hint at the early taper and those concerning the RBNZ hint rate hikes in late 2021.
It’s worth mentioning that the recent weakness in the US Jobless Claims and fears of the virus variant to test the off-pandemic scenario also underpin the US Treasury yields. As per the latest study, over 50% of covid infections registered in the last two weeks inside the US are of the coronavirus strains.
The grim reality of the variant’s resistance to the vaccines and ability to spread faster add to the market’s fears of such developments and favor the US Treasury yields. The same weigh on the gold prices while offering the US dollar index (DXY) a helping hand, up 0.05% by the press time.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD extends losses to near 1.1150 on increased dovish ECB bets
EUR/USD accelerates decline to near 1.1150 in European trading on Friday. Softer French inflation data ramped up Oct ECB rate cut bets, weighing on the Euro. However, the downside could be cushioned by the renewed US Dollar weakness, as US PCE inflation looms.
USD/JPY slides 1% toward 143.00 as Ishiba wins LDP leadership race
USD/JPY is seeing a fresh sell-off toward 143.00 in the European session on Friday. The pair loses over 300 pips, as the Japanese Yen rebounds on Shigeru Ishiba's win in the LDP leadership run-off. Sanae Takaichi, who favored keeping interest rates lower, was expected to win the race.
Gold correction remains in the offing amid month/quarter-end flows
Gold price treads water while within a striking distance of the new record high of $2,686, as buyers take a breather and consolidate the weekly gains in the countdown to the US Personal Consumption Expenditures Price Index data release later on Friday.
US core PCE set to show continued disinflation trend, reinforcing Federal Reserve easing cycle
The core Personal Consumption Expenditures Price Index is seen rising 0.2% MoM and 2.7% YoY in August. Markets have already priced in near 50 bps of easing in the next two Federal Reserve meetings. A firm PCE result is unlikely to move the Fed’s stance on policy.
RBA widely expected to keep key interest rate unchanged amid persisting price pressures
The Reserve Bank of Australia is likely to continue bucking the trend adopted by major central banks of the dovish policy pivot, opting to maintain the policy for the seventh consecutive meeting on Tuesday.
Five best Forex brokers in 2024
VERIFIED Choosing the best Forex broker in 2024 requires careful consideration of certain essential factors. With the wide array of options available, it is crucial to find a broker that aligns with your trading style, experience level, and financial goals.