The ‘Martian alien’ test of US 10 year yields points to the the Fed not done hiking yet

ING say that the US 10 year Treasury has “not been trading in a manner consistent with prior peaks” in US interest rates.

Says extrapolating leads to the risk of a 5% yield:

  • 10-year yield has remained elevated, which is not what would be expected if the Fed was finished hiking interest rates
  • “Had a Martian alien landed on earth and simply eyeballed the current movement of the 10-year yield, [it would] likely conclude that the Fed had not peaked at all”

ING point to firm labour market data and the nudge higher in inflation.

Chart shows the 10 yr yield, weekly candles:

This article was written by Eamonn Sheridan at www.forexlive.com. Source