We had a very dramatic rebound in European banking stocks at the start the day, today.

Not surprising given how far they had sold down,

and then we had the much awaited testimony from Janet Yellen's congress

where she did a very good job of not creating any new news.

Basically, the message is that there could well still be more rate rises to come this year,

if the economic data support it.

Not the faintest hint that we could be heading towards negative rates as many now fear.

Now that led to quite a positive reaction from the markets at first,

but by the end of the day, the forces that have been dominating for a while came back to predominate.

If we take a look at this chart,

it shows you the yields curve, the spread of 10-over 2-year treasury yields,

you can see that we have now dropped below a hundred basis points for the first time since the crisis.

It's a very precipitate fall we've seen in the last few weeks,

and on the face of it, it is a clear signal that the market is worried about possible recession coming.

It's when you begin to expect that there won't be any great rise in interest rates in the future,

that you're thinking that there's gonna be low growth and low inflation.

Now, there is a clear explanation for why this is going on; however,

which is the ongoing reaction to the monetary policies of the European Central Bank and the Bank of Japan.

If we take a look at this next chart, it shows you 10-year government yields for the USD eurozone in Japan.

You can see that in Japan following the Bank of Japan's surprising move at the end of last month.

Interest rates on 10-year are actually negative.

And we all know that Japan has been in a slump for a very long time,

but that's actually, as you can see, a new development.

Similarly, you've seen German bonds yields fall back down again.

It's no surprise therefore that long treasury yields are also coming under pressure if you've got that kind of competition,

it's not surprising even the low yields aren't offered here in the States.

Appealing that in turn will push the yield down further.

As a result, by the end of the day, we saw the dollar fall significantly once more.

As for the stock markets yesterday, it was almost flat but rallied into the close, keep making people feel more optimistic.

This time, it was almost flat but fell into the close,

probably signaling that after the bounce back at banks, after we've got through Yellen's testimony

we will get back to a continued rather great angst.