Central Bank Anxiety Adding to Weaker Trend

As the market waits for next Wednesday's Fed announcement, there are a few other central bank updates to digest.  This week's examples include the European Central Bank (ECB) announcement on Thursday and the Bank of Japan (BOJ) out overnight.  The BOJ is allegedly responsible for some hawkish bond sentiment in the overnight session as comments suggested a possible end to negative rates in a few months.  Whether reacting to BOJ or anxiety about the upcoming ECB meeting, European bonds bounced quickly higher at 2am, pulling Treasuries along for the ride.  In addition to central bank considerations, there's also a Treasury auction cycle starting today as well as oil prices that remain near the highest levels of the month.

In the following chart, EU and Japan 10yr yields are on a floating axis (i.e. overlaid)