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- Global yields: how high can they go? – Westpac
Global yields: how high can they go? – Westpac
Analysts at Westpac offered their take on the recent upsurge in the US Treasury bond yields and provided a brief insight about the possibilities on any further rise.
"US 10yr yields underwent another significant increase last week. They have now risen by almost 50bps since August and are threatening to break above 2% for the first time since July. The market has now fully unwound its heightened fears around global trade and growth. The question is whether it has now priced-in too much good news, or whether the bearish bond market correction will be sustained? While Westpac remains sceptical of the positive growth hopes supporting record highs in US equities, from a bond market perspective, the answer really comes down to your medium-term FOMC expectations. Having delivered 75bp of easing over the three meetings to October, the FOMC has made clear that they intend to pause and reflect on the state of the economy in December. The data remains soft, but as yet has not pointed to a decisive shift in growth below trend. We expect employment to slow further and investment to remain weak. Consequently, despite market optimism over trade, rate cuts will most likely again be on the agenda in 2020 – in March June & September".
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