Faster and more synchronised world growth is bad news for bond markets. But the prospect of accelerating growth in Europe and a slowing US economy next year points to the outperformance of US bonds vis-à-vis the EU.
Current yields make US treasuries look more attractive than those in Europe or Japan – especially at the two-year to five-year maturities. US 10-year yields may spike up over the next two or three months in anticipation of further interest rate hikes by the Federal Reserve.
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