Bond yields have spiked globally led by an inter-related combination of oil prices and re-pricing of central bank terminal rates. Momentum and investors exiting long exposure has added fuel to the fire. To put it in context, the one-month increase in US 2y yields is one of the largest over the past 25 years. This has pushed up long term rates and flattened the curve. These dynamics haven’t been isolated to the US market; it is a global phenomenon. For now, risk asset such as equities and credit has been well behaved, but history shows when rates rise sharply and there is an accompanying exogenous shock like oil, that small cracks in macro or markets can grow.
Participants:
- Blake Gwinn (Desk Strategy), Head of US Rates Strategy
- Jason Daw (Desk Strategy), Head of North America Rates Strategy
- Peter Schaffrik (Desk Strategy), Head of UK/European Rates & Economics
* Research Analyst opinions are their published views, independent of those expressed by Desk Analysts
