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Today’s Daily Sketch is again devoted to the outlook for bond yields. A couple of days ago I pointed out that the yield curve could steepen further. Today’s chart shows the nominal US 10-Year Treasury rate and the 10-year breakeven inflation rate, generally seen as one of the most reliable market-based measures of expected inflation. The gap between the two has grown historically large. And while nominal bond yields are kept artificially low by massive Federal Reserve bond buying, my guess is that the black line will (slowly) move towards the blue line and not the other way around. Not in the least because ongoing fiscal stimulus aimed at boosting the real economy should have a longer-lasting upward effect on inflation. Hence, remain underweight duration for now.
Didier Haenecour, Head of Fixed Income, WisdomTree We have all felt the brunt of higher inflation rates and the European bond market is no exception. The narrative from the...
Greece’s 10-year bond yield has dropped below 1% for the first time on record. Less than eight years ago, Greek bond yields spiked to as much as 45%, as the country very...
Outside of the United States, flash PMIs were generally better than expected with only the EU Services and Composite dragged lower by strikes in France. And although in the US, the...
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