BlueBay AM: It's rocking in the US
BlueBay AM: It's rocking in the US
By Mark Dowding, co-Head of Developed Markets at BlueBay AM
By Mark Dowding, co-Head of Developed Markets at BlueBay AM
10-yer US Treasury yields have justifiably hit multi-year highs amid a booming domestic economy. Elsewhere, Italy remains a focus where we believe fears of an Italexit are overblown.
US boom time
US yields broke higher during the past week, thanks to further strong economic data and perceived hawkish comments from Federal Reserve (Fed) chair Powell. Yet, it strikes us that little has fundamentally changed.
The US economy has been performing strongly for several months (the Atlanta Fed Nowcast of GDP has been running consistently above 4% since May). A Fed narrative that further rate hikes are expected on a gradual path and that this is likely to lead monetary policy to turn more restrictive into 2020