Bond Compass Navigating the Turn in Yields

State Street Global Advisors
By September 16, 2019 18:21

Bond Compass Navigating the Turn in Yields

  • The most notable change in investor behaviour occurred toward US Treasuries, where overall demand collapsed, driven primarily by selling in the intermediate part of the curve. This could show that investors are not fully convinced that the Fed is about to embark on a protracted easing cycle against what is still a robust growth outlook.
  • Fundamentals are more supportive for eurozone bonds, where weaker growth and inflation expectations are fostering hopes of a re-start of QE. In response, demand for eurozone bonds has surged, notably into countries like Italy where investor holdings are still underweight. Gilts, meanwhile, have been left behind a little, and it is questionable how resilient they would be in a no-deal Brexit scenario.

State Street Global Advisors
By September 16, 2019 18:21

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