I mentioned this last week and despite bond yields now closer to my view of 2.65 peak for this move, I hold that line. 2.75 is the upper end of this band.
The spike lower in US yields from what had been trending 2.50-2.80% on the UST 10yr came from oil and the Euro. The US bond yields got dragged lower and the Euro was trashed. Both were not natural or fundamental levels. Both are reversing.
This entire move is based out of Europe and all we are doing is correcting off of exaggerated positioning and sentiment against the Euro. Where are all those strategists who said we are quickly going through parity??? Sentiment on the Dollar and rates is so coiled because of where investors believe we are in the Fed cycle but really if the fed was also as coiled as people are pricing, the economy would be much stronger.
I'm in the glass half full camp on the US and global economies but let's be clear, we are not testing 3% GDP growth this year. The same folks who are deriding the economy are saying the Dollar is going to 120 and yields to 4.00% This doesn't jive.