Bond yields higher, but directionless
The relief rally in bonds on Friday was at odds with what central banks were saying, says NAB’s Skye Masters. Hence we’ve seen a big sell off overnight. Big moves on little information.
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Tuesday 26th September 2023
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There were big moves higher in bond yields overnight, particularly at the long end. It’s been significant bear steepening, says NAB’s Skye Masters, pointing to the hawkish statements from central banks indicating rates will remain at restrictive levels for quite some time. That’s happening despite more indicators suggesting there is growing weakness in the global economy, but bank boards will want to see reductions in inflation before they change that stance. If the bond markets seem a little directionless right now, maybe inflation numbers later this week will help them see the light.
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