Risk on the defensive to start the session

With equities in a struggling spot, we are seeing a bit more of a risk-off push in markets to start European trading. Treasury yields are more bid, with 10-year yields down 2.6 bps to 3.066% and 2-year yields down by a little over 5 bps to just below 3% again - the first time in about a week: The 3% mark was what put off bond buyers last week but with risk on the defensive now, that may keep the pressure on for today. There's also month-end and quarter-end flows to contend with, so that might make things a bit messier as well. But looking at the bond market as a whole, there will be questions asked as to whether or not we are seeing a peak in yields. Breakevens have started sliding and Fed terminal rate pricing has also come down considerably over the past few weeks. It is perhaps a sign that inflation fears are abating. In FX, the bid in bonds today is helping the yen out with USD/JPY briefly touching below 136.00 on the day and is still down 0.3% to 136.15 at the moment. This article was written by Justin Low at www.forexlive.com.
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