Bonds Sell Off as Inflation Fears Eclipse Jobs Data
Government bonds declined on Tuesday, with US yields rising across the curve as markets focused on inflation risks rather than the labor market. European rates saw bear flattening.
Sovereign debt sold off across major markets, with the US curve shifting higher by 4.7 to 6.4 basis points. The belly of the curve underperformed, indicating that intermediate maturities led the move. In Europe, curves exhibited a bear flattening dynamic as short-end rates rose more sharply than long-end yields.
The price action reflects a market narrative that inflation concerns continue to dominate over employment data. Bond traders priced in higher term premiums amid lingering price pressures, reversing some of the recent flight-to-quality flows.
Trading volumes picked up as investors reassessed the pace of central bank easing. The session offered no major data catalysts, leaving the inflation theme firmly in control.
Source: FXStreet Forex News