Global View September 2015: Where Are US Bonds Heading?

by Michael J. Howell15. September 2015 17:33

Two burning questions are: (a) will a pending US Fed Funds rate hike and (b) continued selling of US dollars and Treasuries by China cause US bond yields to spike higher? Our answer is ‘no’ largely because the safe haven attractions of US Treasuries will keep yields low. A 25 bp rate hike could add 15 bp to 10-year Treasury yields. But another couple of months of capital flight from China could push them down by 50 bp because of lower term premia.

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