21. December 2016 11:53
Global bond markets, led by US Treasuries, are finally selling off. The excuses of rising inflation expectations and President-elect Trump are not convincing. Chinese reflation and reversing term premia look to be better answers, but they are more worrying ones since they suggest that government yields could jump by far more. These term premia are determined by liquidity and volatility. Rising Chinese liquidity warns that US Treasury 10-year yields may be still at least 100bp too low.