Yields spike sharply as markets repriced rate expectations

It looks like the next move in yields will be to the upside, targeting the 1.5% level for the 10-year maturity. It took some time for investors to digest the latest FOMC decision, which sounded hawkish, and they sold bonds Thursday, sending yields higher. 

Rising yields undermined precious metals as gold and silver fell yesterday, but they managed to erase those losses today. Despite rising inflation, it is hard to see metals performing well in the upcoming tapering environment.

The greenback ignored rising yields and remained weaker on the day against most of its major peers as the EURUSD pair moved toward the 1.1750 level.

Elsewhere, the Bank of England voted to begin its own tapering amid soaring inflation. However, the central bank decided to ignore the ongoing deterioration in the economic data. 

Later in the day, German IFO surveys will be released, expected to improve slightly and possibly influencing the EURUSD pair and German DAX index.

The calendar is rather empty during the US session, offering only new home sales, which rarely cause any market volatility.