Bond Outlook [by bridport & cie, June 13th 2007]
Various reasons have been put forward to explain the sharp rise in yields at longer maturities. One is the fear of inflation, which echoes the worries of Bernanke. Another is a reduction in liquidity, blamed on growth of the world economy sucking up funds for working capital at an increasing rate. This is an argument we have some difficulty absorbing; it is largely based on the observation that TIPS are not suggesting much future inflation. |
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