Global bond markets finally found their footing last week, and currency markets followed suit.
The 10-year Treasury yield touched a fresh 24-year high on Thursday, but it ended the week slightly lower, while French bonds recovered some of their recent losses. The US Dollar Index had been grinding steadily higher due to the rout, but it ended the week close to unchanged. Equity investors took the calmer backdrop as a green light, and the S&P 500 set fresh record highs midweek despite long-term yields sitting near multi-decade peaks. We would caution against reading too much into a single week of calm. None of the fiscal worries in France or the UK have been resolved, and the equity rally looks increasingly disconnected from the rising cost of long-term borrowing. For now, however, bonds appear to have dropped sufficiently to entice some bargain hunting.