US 10y yields
There was some hope that yields would stop rising after the Gaza terrorist attacks but that’s looking less and less like the case, in large part because the US economy continues to hum.
The market is pricing in a higher-for-longer scenario with just 58 bps in cuts for next year now priced in, well-below the 70 bps in cuts priced in last week.
In turn, US 10-year yields are up 14 bps to 4.85%, now just 3 bps from last week’s high. And if that gives way, we will certainly be talking about 5%.
It’s not just a US phenomenon today, which would help to explain why the US dollar hasn’t extended gains after retail sales. Italian 10s are up 15.2 bps to 4.91% and bund yields are up 10.5 bps to 2.88%.
The renewed surge in yields is weighing heavily on stocks with the Nasdaq down 1.5%.