10-year Treasury yields are at their highest since 2007, touching 5.018% currently as the selling in the bond market continues. I would’ve expected a slightly more reactive function in the dollar but that hasn’t really been the case. The greenback is rather muted across the board and it is equities that have reacted much more. S&P 500 futures are now down at the lows for the day, softer by 0.7%:

It has been one-way traffic for equities since the opening bell in Europe and the fact that 10-year yields in the US have crossed over above the 5% mark is just compounding woes at this point.

Going back to FX, the dollar is rather muted with EUR/USD flattish at 1.0595, USD/JPY still thereabouts at 149.93, and GBP/USD flat at 1.2155 on the day. It is only the aussie and kiwi that has weakened slightly with AUD/USD down 0.3% to 0.6291 currently but that owes more to the drop in risk trades amid higher yields, rather than any outright dollar strength.

This article was written by Justin Low at www.forexlive.com.