Global Yields Surge After CPI Data and Bank of Japan Rate Hike

Bond Market Reaction to CPI Data

• 📈 Yields have risen following the latest CPI data, with both the 2-year and 10-year maturities showing higher yields than yesterday.
• ⚠️ The market appears to be weighing in on the CPI data, despite its perceived inaccuracy, and the yields moved higher shortly after its release.
• 📉 The University of Michigan sentiment survey showed weak current conditions, the lowest in history, yet equities have been heading north, indicating a potential loss of correlation.

Global Interest Rate Movements

• 🇯🇵 The Bank of Japan has raised interest rates by a quarter point to 0.75%, marking a significant shift from previous negative rates and reaching a 30-year high for the overnight rate.
• 🇫🇷 In France, the 10-year yield closed at 3.61%, its highest in 14 years.
• 📈 The Japanese 10-year yield has surpassed 2%, reaching a 26-year high.

Implications of Global Tightening

• 🌍 These global rate hikes signal a broader tightening of monetary policy and arbitrage worldwide.
• 🏦 The distortions caused by years of negative rates, particularly from Japan, may have significant effects on global sovereign markets.