Even Modest Losses Would be a Victory of Sorts

Bonds had a good overnight session with fairly steady gains in both Asia and Europe.  Kwarteng, the British Finance Minister who kicked off the worst of the recent rate drama (3 weeks ago today) resigned, but the British PM has made several comments that leave some doubt as to how much things will change as a result.  The morning had been shaping up to be a definitive victory for bonds, and that could have been the case even if yields rose modestly, but things are shifting in AM trading thanks to more comments from PM Truss, the 10am Consumer Sentiment data, and a slew of comments from various Fed speakers.

If there was any doubt as to the relevance of UK trading and the spillover to US bonds, here's an updated look at UK 10s vs US 10s.

We began the day hopeful that 10yr yields could continue respecting the ceiling of the new, higher range.  That looked like it would be easy at first, but it's not something we'd take for granted after the AM weakness.  In fact, this week's weakness has reintroduced the validity of the longer-term uptrend that looked to be defeated last week.