Bonds Under Pressure From Rate Hike Outlook and Europe

Abstract

In the bigger picture, longer-term yields are trading a narrow, sideways range this week with today's yields well inside yesterday's range and yesterday roughly in line with Mon/Tue's range. All of the above is WELL within the range from last week. Against that backdrop there's been volatility and the latest iteration was unfriendly this morning. Yields were briefly lower at the open, but moved up steadily heading into the 10am hour. The losses lined up perfectly with a ramp in Fed rate hike expectations and shorter-term yields. This was primarily a benefit for the short end of the yield curve. 2yr yields are closer to unchanged on the day than 10s. One other thing Waller mentioned was that tomorrow's Retail Sales report would help shape the rate hike outlook for the coming meeting.