US 10-year yield ends week little changed, capped by risk aversion

A volatile week, ends with sharp losses in Wall Street. 
Fear among investors increased appetite for US bonds. 
Markets on a new short-term normal. 

The 2-year yield finished the week lower, moving further away from 9-year high. Risk aversion increased the demand for short-term bonds. The 10-year bottomed on Tuesday at 2.65% and ended the week hovering around 2.83% still below where it was a week ago. On Thursday it approached multi-year highs at 2.88% and pulled back. 

Equity prices in Wall Street were on track for the worst week since 2011. Risk aversion triggered the demand for Treasuries. The Dow Jones was falling on Friday 0.15%, accumulating a weekly loss of around 7%. The week included a flash crash on Monday. DJ Futures bottomed at 23,130 on Tuesday in Asia, the lowest since mid-October. The index then rebounded but finish the week pointing to the downside, and still showing vulnerabilities. 

The recent moves in Wall Street added concerns just in time when market participants were starting to consider the possibility of four rate hikes from the Federal Reserve (instead of three) on the back of recent data and prospects of rising inflation expectations. 

While speculations of more rate hikes could boost yields to the upside, risk aversion triggers demand for safety that includes US bonds. It is not clear that the sell-off in Wall Street is over and as long as fear remains elevated, yields are likely to point lower.