The bid for stocks and bonds is relentless


We’re back to where we started.

US markets have completely erased the moves after the strong non-farm payrolls report. The S&P 500 is now down just 5 points to 4071 and on track for a weekly close above 200-day moving average for the first time since April. It’s an impressive performance.

More curious is the relentless bid in long-dated bonds. US 10s are down 3 bps to 3.49% from a high of 3.63%. US 30s are down 8 bps to 3.55% from a high of 3.70%.

One line of thinking is that bond market participants are trying to get ahead of ‘the next big trade’ which is the weakening of the global economy and a fall in inflation. Whatever it is, the decline in yields is sapping the US dollar.

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