Unexpected volatility in interest rate markets, with a positive outlook for risk assets🙌

With a light, Tier 2 data-set that came in mostly with a standard range of expectation, interest rate markets saw an unexpectedly large move with a 14bp move higher in 2yr and +10bp jump in 5yr yields. However, trading volumes were light and typical for a thin summer holiday session, and the price action might be better explained as a healthy correction after fixed income rally for most of the week. Nevertheless, the overall decline in realized US inflation has ratcheted risk sentiment higher by another notch, as most sentiment and equity volume indicators are heavily biased towards risk-on. We expect to see risk assets continue to hold in over the summer break.

#interestrate #2yr #5yr #riskasset #volatility