After rising strongly last week, EU bonds are starting to rise even more strongly. This was notable this week as the 10yr yield fell all the way to its lows in late June in the wake of positive inflation data and conciliatory rhetoric from the ECB. Together with the Fed next week, we see the ECB stepping in again and then “wait and see”. This represents a sharper shift from the dominant position of the European Central Bank compared to the Federal Reserve. As of this morning, this thread of trading appears to be over. US bonds were already falling (or at least refusing to participate in much of the rally). Now that EU bonds have sold off at their fastest pace since late June, US bonds are free to continue to confirm the bottom of the range.