After a substantial downside correction in the past months, expectations for central bank rates have recently started to bounce. We think this process has somewhat further to go,especially in the US, as economic conditions in China,the US and even Europe are showing signs of recovery after a series of negative surprises.
Consequently, we see scope for an additional15-20bp uplift in 10yr UST yields in the nea r term, and somewhat less in the Eurozone and Japan;Chinese government bond
yields are already Ieading the
The potential for a stronger repricing of developed market yields is probably capped bythe de facto easing bias recently adopted by the major central banks, which seem determined to avoid a recession.
are expected to steepen in the current environment, with the exception of
the ultra-lang end.
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