The yield on US Treasurys have taken off with the 2s as high as 3.522% and the 10s to 3.363%around  trend highs on expectations of an aggressive Federal Reserve.

US data was solid on Tuesday with the August ISM services index in the US beating expectations, rising to 56.9 (56.7 previously, 55.3 expected).

Analysts at ANZ Bank noted that the gains were led by new orders which rose to 61.8 vs 59.9. Employment was 50.2 vs 49.1 and prices paid eased a touch to 71.5 vs 72.3, but remain elevated.

''The report implies strong and firming demand. Supplier delivery times (54.5 vs 57.8) continued to ease suggesting supply chains are normalising in the services sector. The data complement the labour market’s strength and suggest that the economy remains some distance from recession.''

The outcome has been a blow for USD/JPY shorts, trapped in a rising market: Breaking: USD/JPY bulls smash through 143.50

US 10Y daily chart

The yield is creeping in on the summer highs towards 3.5%