Bond yields are making rather more sense today, with the bund yield back in its trading range and the 10-year T-note’s upside breakout from a triangle holding firm.

The US 10-year yield and USD/JPY have made the same triangle since the start of 2010, and have now had the same breakout (see charts below, from Bloomberg and IG Index). I think I would prefer to trade it in USD/JPY, because the fuzziness of the currency market means I am more likely to get a good entry point, and because the currency could have futher to run than the 10-year yield (it’s not anchored by central bank rates).

Update: Here are some long-term charts:

There is clearly a relationship here — but why?

Update 2: From Bloomberg.