From the desk of Willie Delwiche.
The recent uptick in US Treasury yields has not been confirmed by other areas of the bond market (specifically Bunds & JGBs). Bonds at this point are extremely oversold and sentiment indicators are pointing to excessive pessimism. The caveat is that bonds are in a bear market and so this sort of behavior should not come as a surprise. Still, there may be some room for yields to consolidate or even pullback from here. If that happens, it could provide a chance for gold to gain some traction. Gold & bonds have moved similarly in recent years, though gold has started to firm up even as bonds sold off this week. What sort of retracement of their recent weakness either bonds or gold can achieve remains to be seen – but an opportunity for that may be emerging.