10-year Treasury yields are down to 4.707% now after returning from the long weekend, down notably from 4.782% at the end of Friday. That being said, they are much higher than the opening gap lower of 4.636% earlier today. We already saw how stocks brushed aside the Middle East conflict yesterday, will we see the same for the bond market later in the day?

That’s certainly something to watch out for and that could hurt risk sentiment, despite the strong rebound we are seeing in stocks since late yesterday. My gut feel tells me that investors are likely to keep any optimism in check, so perhaps we might not get roaring gains especially since the US CPI data is coming up on Thursday. But if bonds are going to topple over, it could see selling flows spill over to broader markets as well in the session(s) ahead.

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