Three things to note when considering the influences on US government bond yields: 1. While Fedspeak this week has struck a hawkish tone, it was not quite as aggressive as the rate-hike trajectory currently priced in by markets. 2. While I have been pointing for months to the widening imbalance between surging higher supply and waning appetite from some dependable long-term buyers, the recent yield spike appears to have overshot this and other main drivers (a dynamic consistent with the growing footprint of hedge funds in this market segment). 3. On a relative valuation basis, US Treasury yields now look distinctly attractive when compared to some other sovereigns. Even with these stabilizing factors, volatility and dispersion will remain defining market themes amid wider geo-economic crosscurrents. Moreover, I think the migration of interest rate risk into credit risk is still unfolding. #economy# #markets# #bonds# #yields#