The market is seeking a bit of a breather as we get things going in trading today and that is seeing equities recover some ground and bonds are also spared another beatdown as the selling cools. Here’s a look at how yields are faring as we start to get into European morning trade today:

  • US 10-year yields down 8 bps to 3.29% (down from 3.36% earlier)
  • Italy 10-year yields down 6 bps to 4.04%
  • Germany 10-year yields down 1 bps to 1.62%

But not all things are equal in the bond market with Japanese 10-year yields inching higher today to 0.26% and straying offside from the BOJ’s implied cap. Meanwhile, Italian 2-year yields are still a little higher to start the day as it is up 3 bps to 2.02%. That said, 2-year Treasury yields did come down from around 3.39% earlier to 3.30% at the moment.

The selling has abated but this looks to be more of a breather rather than a major change in sentiment, at least until we get to the Fed. As for Europe, it will very much depend on how ECB policymakers continue to address fragmentation risks in the weeks ahead.

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