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Reaction Moderates, But Yield Surge Sees 10y Near 3.90%

  • Treasury futures sold off in response to the beat on headline payrolls, with the US 10y yield surging to touch 3.8957%, with 3.90% seen as the next resistance. Above here, yields narrow in on the cycle highs of 4.0150% printed in late September.
  • The unemployment rate unexpectedly dropped, prompting concerns that the Fed could have to act further to tame the tight labour market, which sees equities shed around 40 points before stabilising. E-mini S&P printed a low at 3710.25.
  • The greenback rallied to a session high, putting USD/JPY clear of the overnight highs to touch 145.16 at typing.
  • Focus turns to the Fed speakers due later today, with Williams, Kashkari and Bostic on the docket as well as Biden's comments on the economy this afternoon.
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