US Treasury yields pulled back in response to the announcement of lower-than-expected bond issuance for the fourth quarter. This development sparked positive risk sentiment and led to a bid in bonds, resulting in a decrease in bond yields.

The Bank of Japan is poised for another revision of its yield curve control (YCC) framework in response to emerging economic challenges. In a critical monetary policy meeting scheduled for Tuesday, the central bank is considering allowing the yields on 10-year Japanese government bonds to exceed the 1% mark.

Today’s key event in the data calendar is the release of US Personal Consumption Expenditures (PCE) data. While this is the Federal Reserve’s preferred measure of inflation, it typically lacks the same level of market-induced volatility as the Consumer Price Index (CPI).

Recent economic data has been mixed, with better jobs data but a big surprise move lower in inflation last week.

Economic Calendar: UK Jobs & PMI Data, AUD CPI Data, German and French Flash PMI Data, ECB Policy Decision.

Risk assets tumbled last night as geopolitical tensions saw more escalations. Talks of attacks on US Navy ships sent geopolitical jitters across markets boosting gold and oil prices.

Today, the financial markets continue to closely monitor the US 10-year Treasury yields as they edge closer to the 5% threshold. This ongoing climb in yields, which reached a new cycle high last night, has added further pressure to risk appetite.

China’s data releases this morning showed some marginal signs of improvement, with retail sales, industrial production, unemployment, and Q3 GDP all printing better than expected. This gave the AUD a boost, and allowed traders to take some profit on AUDCAD longs from yesterday.

AUDNZD Jumps on Weak NZ CPI Data and Hawkish RBA Minutes

Crude oil prices have managed to sustain the gains observed last Friday, with market attention keenly focused on the unfolding events in the Middle East.

Markets are relatively quiet today as participants digest yesterday’s risk off flows following the slightly better than expected US CPI and a weak 30-year treasury auction. WTI saw a big bounce trading to $85.37 as geopolitical issues remain in focus.

Equities continued their march higher today, with the S&P 500 trading at its highest levels in three weeks. The move higher happened despite a big beat in US PPI data yesterday, which showed that inflation is still stubbornly high.