Rising US Treasury yields likely to drive DM bond yields higher

We continue to expect that a continued global economic recovery and high US inflation will cause US Treasury yields to rise and push long-term government bond yields in most other developed markets.
Jonathan Petersen Markets Economist
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Payrolls and the flattening Treasury yield curve

The ostensibly disappointing November US Employment Report released today has not dented expectations for near-term monetary tightening in the US at all, perhaps because of the growing signs this week that Fed officials have become more concerned about inflation. If policymakers are indeed determined to press ahead with tightening next year, even as the recoveries in the economy and labour market potentially slow, we could well see the Treasury yield curve flatten further.

3 December 2021

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Growth concerns buoy the dollar despite falling US yields

Although it has fallen back a bit today after China delivered a surprise cut to banks’ reserve requirements, the US dollar has otherwise continued to appreciate against most currencies. The dollar’s strength appears increasingly driven by concerns about the pace of the global economic recovery: “reflation” trades across currency, bond, and equity markets have remained under pressure, with bond yields falling particularly sharply. Next week’s key data releases include US inflation, which we expect to have risen further, and China GDP and activity data, which we think will show a further slowdown. That may reinforce concerns about the global economic outlook and support the dollar. In addition, Fed Chair Powell will testify to Congress on the economic outlook.

9 July 2021

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Making sense of the mixed signals behind US dollar strength

The US dollar has strengthened against most currencies, despite the fall in the yield of 10-year US Treasuries. We think that the greenback will appreciate further, aided by a rise in long-term Treasury yields.

1 July 2021

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US ISM and payrolls could add fuel to the dollar rally

The US dollar seems set to end the week slightly weaker, but has held much of its gains following last Wednesday’s FOMC announcement. With increasing focus on the prospects for monetary tightening globally, next week’s employment and survey data in the US may push the dollar higher, if they back up the Fed’s optimistic assessment of the economic outlook.

25 June 2021
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