Bond Outlook July 13th

If US household earnings really have gone up - increased fiscal income for the Administration supports the idea - then inflation beckons and the 10-year yield cannot stay so low much longer.

Bond Outlook [by bridport & cie, July 13^th 2005]

There have been two reversals of conventional wisdom over the last few days:

That revaluation of the RMB is no longer a betting certainty, as China is slowing anyway
That the ECB’s cut in the refi rate may no longer be counted on, as a lower EUR and higher oil prices have brought back too great a risk of inflation.

The second of these opinion reversals may explain the modest recovery of the EUR against the USD.