US ten year bond prices flirted with seven year lows overnight. A breach of the yield high at 3.13% could see a sharp increase in bond market volatility and significantly higher interest rates. Despite this flashing red light currency markets were calm and shares broadly rose, assisted by evidence of increasing energy demand.

The ten year yield traded up to 3.09%, before closing slightly lower at 3.06%. Interest rate curves steepened across the board. German bunds threatened the 0.5% mark and UK gilts traded back to their 2018 yield high. Although the moves are a response to better data, and particularly higher wages growth, the potential for a sharp increase could rattle stocks trading at all-time highs. Any hints that international US bond holders are selling in relation to trade disputes could also dent investor sentiment

The higher growth, tech heavy Nasdaq 100 index fell despite gains for the blue chip Dow Jones Industrial index. This is evidence of a more defensive mindset in stock trading. Asia Pacific share futures are indicating a muted start to trading.

Currency markets are calmer, with little movement in major pairs. On a positive note New Zealand reported an annual rate of GDP growth at 2.8%, outstripping forecasts at 2.5% and inducing a Kiwi dollar spike.

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