Thursday, October 30, 2014

Bond behavior all about the macro



Inflation expectations have declined significantly over the last year. Growth has slowed which is bad for real rates and the odds of rate increase have declined. Risk premiums have also declined. Risk-on still seems to rule the day even with the October scare. The downward pressure on rates has been real even with the recent reversal. There needs to be signs that these factors are changing for rates to move higher.

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