US 10-year treasury yields back above 4%

10-year treasury yields are back above 4% in early Monday trading.

It’s been a bit of a perfect storm for bonds:

• Inflation expectations jolting higher alongside oil prices
• Better than expected US data pushing back against recession fears (this shouldn’t have been a fear but anyway)
• Big repricing in unrealistic expectations for aggressive cuts

Even though all these things have support yields running higher and bonds pushing lower, there is a chart that bond shorts needs to keep on the radar here.

The 2s10s are inching back towards 0.0%, and I would expect bond buyers to put up a fight around that area. If I eyeball it that puts ZB around the 121’17 mark which is also the low from the 8th of August.

I reckon that’ll be key support for bonds to keep an eye on.

This article was written by Arno V Venter at www.forexlive.com.