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12 Feb 2014
Flash: New Normal for UST Yields? - Societe Generale
FXStreet (Barcelona) - Kit Juckes, Global Head of Currency Strategy at Societe Generale suspects that there could be a new normal for US Treasury yields.
Key Quotes
"Janet Yellen managed both to make it clear that the Fed intends to stick to its current path of gradually slowing the pace of bond-buying, and to sound suitably dovish about the outlook for wages, inflation, and monetary policy overall.”
“In the process, she propelled equity indices higher and boosted risk sentiment, while Treasury yields edged higher again. The upshot is that the dollar is at its lowest level in almost a month, and Bloomberg’s dollar index (see chart), has decoupled from the path of 10-year Note yields, after 6-months when the ‘taper tantrum’ was the driver of FX trends.”
“Could it be that markets (equities, credit, FX and perhaps even to some degree, EM) are ‘getting used’ to the new range for Treasuries, so that we will only see renewed tension if/when they move much closer to the top of the 2.5-3% range?"
Key Quotes
"Janet Yellen managed both to make it clear that the Fed intends to stick to its current path of gradually slowing the pace of bond-buying, and to sound suitably dovish about the outlook for wages, inflation, and monetary policy overall.”
“In the process, she propelled equity indices higher and boosted risk sentiment, while Treasury yields edged higher again. The upshot is that the dollar is at its lowest level in almost a month, and Bloomberg’s dollar index (see chart), has decoupled from the path of 10-year Note yields, after 6-months when the ‘taper tantrum’ was the driver of FX trends.”
“Could it be that markets (equities, credit, FX and perhaps even to some degree, EM) are ‘getting used’ to the new range for Treasuries, so that we will only see renewed tension if/when they move much closer to the top of the 2.5-3% range?"