The rally in global bond yields including our own has accelerated and the 3% we thought would cap the local 10-years in 2022 looks likely to be eclipsed in the coming weeks. Even though it’s starting to feel like panic the current momentum could easily take the local 10-years towards 3.5-4% before we see a meaningful correction – how far they surge is hard to gauge but this is not a move to fade as commodity prices and inflation surge to levels not seen in many, many years yet bond yields are still well below where they were a decade ago.
Overnight early in the session, we saw US 5-year yields rise above their 30-year peers suggesting that investors are starting to foresee economic contraction on the horizon.
MM is bullish bond yields medium-term
