Details Cookies
Hong Kong S.A.R
Cookie policy

This website uses cookies to offer you a better browsing experience by enabling, optimising and analysing site operations, as well as to provide personalised ad content and allow you to connect to social media. By choosing “Accept all” you consent to the use of cookies and the related processing of personal data. Select “Manage consent” to manage your consent preferences. You can change your preferences or retract your consent at any time via the cookie policy page. Please view our cookie policy here and our privacy policy here

US bond yields know no limits US bond yields know no limits US bond yields know no limits

US bond yields know no limits


Summary:  Overnight market action saw some very significant levels breached, particularly in US government bonds, where yields are hitting new highs across the curve. These moves will likely reverberate globally.

The thing about global macro, is it literally comes down to a handful of key days in a year. There are the days that have huge implications from a need-to-react function, say an event like Brexit, the Trump victory or Swiss National Bank's franc de-peg, that can make you a fortune or lose you the ranch.

Then there are the slightly more ‘ninja sessions’, when the markets cross exceptionally significant levels. The overnight session was an example of the latter, and it's worth bearing in mind that folks sometimes miss the ‘ninja session’ and read the initial market reaction or lack thereof as being correct.  

US bond yields are breaking out to new cycle highs, as we took out the congestion in the 10-years (3.12%) and even more importantly in the 30-years (3.26%). As we continue the Asia morning we are at 3.18% on US 10-yr treasuries (yes… that would have been considered high in the 30-yr bonds just a few weeks ago) and 3.34% on the 30-yr bonds. The latter breaks a big multi-year resistance line (think US 10-years at that 2.60-70 level and then again at 3.00-10).

This was correlated to a few big things overnight, chiefly the US once again demonstrating that it is on fire versus the rest of the world (this has been a Macro Monday mantra and continues to be the most important theme in global macro).

ISM services came in at 61.6a vs. 58.0e or 58.5p – its all-time highs surpassing the 59.6 peak in 2004. ADP smashed it at +230k a vs. 185k e. Suggesting US 3Q GDP will be stronger than expected.  

Meanwhile as we are getting this historical move in yields and economic data, equities were bid, volatility ticked lower (VIX at 11.61, c. -4% for the session -10% last five days), USD went up yet predominantly against the majors and less significantly against EM FX.

A few things seem to be lagging, chiefly gold (at c. $1,200/oz) which should be easily $10-20 dollars lower from here given the higher USD and the higher breaking out in US yields. Japanese government bonds which at c. 13-14bps should be breaking out above 20bps. Even bunds at 47bps should be pushed higher, albeit that has to be measured against the noise in Italy and its budget process. Bottom line… the rest of the world’s global yields cannot exist in a vacuum as the US pushes higher. It looks like things are setting up for further legs in the USD and a potential nipping in the bud of the technical bounce we had seen in EM assets. CNH at 6.9065 feels like it should be much higher… as should some of the other EM currencies. Also downside expression in equities, which can be cheaply expressed through long puts/ put spreads resonate with this writer.

The price action on S&P Futures & Nasdaq-100 in the Asia morning session at -45bps and -55bps is more of a market that is starting to digest the implications of higher US yields. Incidentally guess where S&P500 dividend yields are? That’s right 2.0%, that with 1-yr treasuries at 2.60%, 2-yr at 2.88% and 5-yr at 3.05% (yes 305 bps). 

Dollar-yen lift-off?
US 10-year bonds in defiant lift-off
It's the same story with US 30-year bonds
EURUSD dips below 1.1500
New lows in gold look likely
And new highs in Japanese government bonds are also on the cards

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (
- Full disclaimer (

Saxo Capital Markets HK Limited
19th Floor
Shanghai Commercial Bank Tower
12 Queen’s Road Central
Hong Kong

Contact Saxo

Select region

Hong Kong S.A.R
Hong Kong S.A.R

Saxo Capital Markets HK is a company authorised and regulated by the Securities and Futures Commission of Hong Kong. Saxo Capital Markets HK Limited holds a Type 1 Regulated Activity (Dealing in securities); Type 2 Regulated Activity (Dealing in Futures Contract); Type 3 Regulated Activity (Leveraged foreign exchange trading); Type 4 Regulated Activity (Advising on securities) and Type 9 Regulated Activity (Asset Management) licenses (CE No. AVD061). Registered address: 19th Floor, Shanghai Commercial Bank Tower, 12 Queen’s Road Central, Hong Kong

By clicking on certain links on this site, you are aware and agree to leave the website of Saxo Capital Markets, proceed on to the linked site managed by Saxo Group and where you will be subject to the terms of that linked site.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

Please note that the information on this site and any product and services we offer are not targeted at investors residing in the United States and Japan, and are not intended for distribution to, or use by any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation. Please click here to view our full disclaimer.