Over the previous days and weeks, we've seen some severe "spikes" in longer-term US yields, while short-term yields remain depressed near record lows. The yield curve has steepened notably, which has always been a bearish sign for the overall economy and financial markets. 

The US 30-year yield rose back to a 2-handle, above 2%, the highest level since February 2020 making it a new post-pandemic high. The 10-year yield jumped above 1.2%, a level last seen in March of 2020.

Simultaneously, the Federal Reserve (Fed) noted that monetary policy would stay accommodative for a very long time. On February 10, Chair of the Federal Reserve Jerome Powell said the true unemployment rate is actually 10%, in a speech on the labor market. Moreover, he reiterated that rates would stay low.

It’s only a matter of time before the Fed will need to officially announce the yield curve control and start buying large quantities of long-term bonds to suppress the advancing yields. Inflation expectations are rising fast, making bonds less attractive, and a "smarter" investment could just be to dump bonds and buy stocks. 

Meanwhile, the USD remains low against most of its major peers. The USDJPY which tends to be closely correlated to US yields, is the only pair that’s gone higher. 

As long as the EURUSD trades above 1.2050, the medium-term outlook seems bullish, while the GBPUSD pair is approaching the psychological level of 1.40.

One of the biggest underperformers lately have been gold and silver. Gold is stuck in a bearish trend since August highs, while silver tried to move above 30 USD but was smashed lower. 

On the other hand, the clear winners in this inflationary environment are oil and copper, rising without any interruptions.