US treasuries and the coming bond market sell-off – be warned By Guillermo Osses and Ed Cole 1 minute read 20 July 2021
After peaking at 1.78 per cent at the end of March this year, US 10-year Treasury yields have declined, despite a larger-than-forecasted acceleration in inflation.
There are two schools of thought for this:
on one hand are those who believe that the Federal Reserve will be proved correct and that inflation temporary
on the other are those who believe that the Fed will commit a policy mistake and trigger a recession, resulting in the Japanification of the US economy.
The performance of risk assets such as equities and credit spreads in the second quarter would support the former thesis rather than the later.
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