Double-bottom or double-top in yields?
The retreat post-Jackson Hole poses fresh questions to the market and it is likely one that we won’t see get answers to perhaps before the FOMC meeting on 22 September.
10-year Treasury yields have fallen back below 1.30% this week and the retreat now signifies a double-top in yields after the double-bottom from the July and August lows.
So, which signal is really telling us about underlying conditions in the market?
Or perhaps is it more telling that we are seeing both come about right now i.e. the market is still debating all the hot topics, namely inflation, delta variant risks, a slowing economy, and Fed taper timeline?
In any case, the range for yields and bond market sentiment is rather well defined now. And until there is a break on either side, that will keep dollar sentiment meandering as well and in turn, keep the market guessing on the next big directional move.