Ten-year Treasury yields plumbed below 3.90% early on Monday, some 34bps lower compared to this time last week. Two-year yields at 3.4% are down more than 30bps over the past week too.
A big week for U.S. housing data kicks off with the NAHB U.S. homebuilder December survey on Monday, with eyes also on PCE inflation updates and a 20-year Treasury bond auction.
There was a similar picture in Europe, where markets are also betting on 150bps of European Central Bank easing next year – starting in April – and 10-year bund yields are testing 2% for the first time since March.
Even though German business morale unexpectedly worsened in December, according to the Ifo institute’s latest survey, ECB officials have aped their Fed counterparts by prodding markets away from assuming rate cuts before midyear.
ECB policymaker and Slovenia’s central banker Bostjan Vasle doubled down on that message on Monday and said the ECB will need at least until spring before it can reassess its policy outlook and that market expectations for an interest rate cut in March or April are overdone.
The euro was a little higher on Monday as a result. The dollar was mixed more broadly – with speculators net positioning on the dollar versus G10 currencies turning negative for the first time since September.
Crude oil prices were lower amid generalized global demand concerns and despite more shipping worries in the Red Sea.
