US 10-year bond yields have dropped to their lowest levels since early May, falling below the lows seen in June. This decline is driven by safety concerns from war threats and expectations that the Federal Reserve may take a softer stance, following recent comments from officials. The Federal Reserve’s position is affected by news of a weakening job market, which could lead to rate cuts. Analysts see the potential for yields to dip further to 4.15%, especially with important data releases like the PCE report coming up. Today’s S&P Global US PMIs for manufacturing and services met expectations, but there are complex tariff effects that are hard to untangle. In contrast, gold prices have risen by $20, reaching near previous highs. This shows ongoing demand for safe assets, even as typical war-sensitive markets like oil are reversing. We are observing two main trends: increasing worries about geopolitical risks and a Federal Reserve willing to cut rates if economic data supports it. The drop in yields on the US 10-year Treasury note reflects cautious investor sentiment. Yields are falling not just as a habit but due to a reassessment of risk and return. The softening job market is crucial—it directly impacts bond pricing. Lower yields suggest traders believe the Fed may lower rates sooner, which would reduce borrowing costs across the economy. This indicates that the bond market is now considering slowdown risks more seriously, rather than focusing solely on inflation. From our perspective, the path to 4.15% on the 10-year yield appears clear, assuming new information aligns with current expectations. The price movements have followed technical shapes, and momentum suggests further yield compression. On the economic side, today’s PMI figures did not shift sentiment significantly but highlighted a growing complexity—tariffs. While the headline numbers weren’t surprising, the cost pressures from new trade barriers are challenging to analyze. These factors could distort future readings, especially in services where pricing can change quickly. Additionally, the increase in gold prices suggests significant investment in safety. This rise occurs despite oil prices declining, highlighting a shift in how markets respond to international tensions. Typically, both gold and oil move together, but this divergence shows that the move into gold is driven by uncertainty rather than just conflict. Markets may start to distinguish between assets sensitive to inflation and those driven by sentiment. It’s essential to watch how traders navigate this difference. The combination of falling oil prices and rising gold suggests a reassessment of growth prospects. Participants in interest rates and macro-sensitive instruments should closely monitor upcoming economic reports. These updates are not just updates—they will influence risk direction. Surprises can occur, especially if employment or inflation data diverges from the expectations set by Fed members like Waller, who pointed out labor market softness. This creates a period where models need to adapt quickly. The risk of policy errors increases if the market anticipates too much change too swiftly, impacting hedging strategies. Overall, the movement in yields is interconnected. Each asset, including gold, reacts to the same flow of information. The spotlight is now on upcoming data and whether it confirms recent market moves. We should continue to evaluate our positions considering inflation expectations and real rates. These factors will guide us as the market shifts and stabilizes. Our focus should closely follow the yield curve’s movements.

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