- The US 10-year Treasury yields stay under pressure around the lowest since early December.
- War-like statements from the US and Iran exert downside pressure as Japanese traders return from the week-long holidays.
The yields on the US 10-year Treasury bonds take rounds to 1.774%, after dropping to 1.772%, the lowest since December 05, amid the Asian session on Monday.
The yields, majorly known as the market’s risk barometer, recently dropped after the US-Iran tussle over the killing of the top Iranian military personnel, Qasem Soleimani, by the order of the US President Donald Trump. That said, the yields lost nearly 20 pips from the year-start levels.
Read: USD/JPY fills opening downside gap, fundamentals remain bearish
Even so, the key risk gauge’s reaction to the geopolitical tension has been negatively affected due to Japanese traders’ off for a week, due to the New Year celebration. Japanese traders are considered as the biggest holders and investors in the US bonds.
It should also be noted that the latest comments from the US Federal Reserve Bank of New York President John Williams might also have exerted downside pressure on the yields. The policymakers emphasized the need to stick to a 2% inflation target, which in turn trims the odds of the Fed’s rate hikes.
Given the geopolitical headlines dominating immediate trade sentiment, any further escalation in the US-Iran drama could weigh on the yields and drive the market’s rush to risk-safety. In doing so, the Japanese yen (JPY) and Gold could become beneficiaries.
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