Global | Bond rout will end, but the real debate is just beginning

The current market sell-off should be contained with a strong verbal reiteration of existing forward guidance from central bankers in the coming days. If policy makers fluff their lines, then we wouldn’t rule out another round of asset purchases to avoid a sustained tightening in financial conditions.

What you will learn:

  • The use of fiscal and monetary policy to manage the economy is likely to become more balanced in the future and that is no bad thing.
  • Transition could prove painful for markets, necessitating a more
    delicate handling than has been evident in this sell-off.
  • In recent days the rout in bond markets has gathered steam. US 10-year yields have risen by almost 50bps in the last 10 days alone. With yields at such low levels the impact on bond prices and therefore the capital losses suffered by investors, has been magnified. 

Topics: Global, Monetary policy, Inflation, Fixed income, Coronavirus, Macro Highlights

Bond rout will end, but the real debate is just beginning