Who knows where these market shibboleths come from? There are "key support levels" on global equity markets, or psychological thresholds in currency markets like ¥120 in the US dollar/Yen pairing. For global bond markets, a totem is 5% on the benchmark US 10 year treasury note.
Sure, there’s always some logic behind the numbers that the quants and chartists and algorithms have factored in, but why are they always nice and round? It's just human nature.
So the best explanation of the gyrations last night on US 10-year treasuries was sentiment. Animal spirits. Or idolatry, in the case of those who attributed it to one man, Bill Ackman, the hedge fund billionaire who a month ago let it be known he had shorted the back end of the US treasury curve.
The 10-year had hit 5.02% last night, the first time in 16 years over that 5%, when Ackman revealed he had covered his short — he reckons yields are near their top and prices their bottom. The yield retraced nearly 20 bps to 4.84%.
