While stocks have been a (mostly) one-way ticket higher, 2021 has been a rollercoaster for interest rates: after 10 year yields rose +83bps in Q1, they fell -27bps in Q2 and have started Q3 by already falling another -12bps.

So yesterday, when commenting on the latest violent move in yields lower which left a majority of rates traders (who have been blindsided by the move) dazed and confused, we quoted JPM’s rates strategist Jay Berry who said that “the 10+bps decline in 10-year yields since Friday morning seems outsized all considered” and added that 10-year Treasury yields was 25bps too low relative to model-implied fair value, a 3-standard deviation divergence, and the largest such deviation since the early fall 2020.

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