Treasury yields fell in the latest session in the site tables, and the long end did the work. The 30 year yield dropped 9.6 basis points to 5.43 percent and the 10 year fell 10.1 basis points to 5.09 percent, against a 9.3 basis point fall in the 5 year to 4.90 percent, a rally that took back a large part of the steepening that followed September’s inflation surprise.
The dollar softened with yields, the dollar index down 0.28 percent to 101.71, while sterling rose 0.79 percent and the euro 0.57 percent. Equities read the move as relief: the Dow rose 1.08 percent and the Russell 2000 1.38 percent, while the Nasdaq 100 was flat.
The argument is now about levels. At 5.43 percent the long bond is paying investors to take duration risk in a way it has not for most of the past two decades, and every softening in the inflation composition, including today’s euro area core print, brings buyers in. Against that sits a Federal Reserve whose chair used his Bangkok closing remarks to play down inflation fears while recommitting to price stability, a combination the market is still pricing.