It looks like the bond market is vindicating the move in FX from yesterday as yields are now breaking higher after a couple of weeks of contemplation, with 10-year Treasury yields having furiously knocked on the door of its 100-day moving average (red line). The key level stands at 2.90% today and we’re now starting to see yields climb above that.

The surprising German producer price figures earlier today isn’t helping, reigniting inflation worries as energy prices in Europe’s biggest economy more than doubled in July. To make matters worse, winter is coming and that does not bode well for the outlook.