Halister News

(Bloomberg) -- Post-election slump in global bond prices, rise in long-term rates will cause “some pain” for existing bondholders and future borrowers, Capital Economics economist Julian Jessop writes in note Tuesday.

• Selloff could gather pace; may be start of shift toward looser fiscal policy, tighter monetary policy led by U.S.
  • CapEcon expects 10Y UST yield to be back at 3% next year
• “Bigger picture” is that bond yields remain near historic lows
  • Even if yields rise further, their long-awaited normalization may be a “welcome side-effect” of fading deflation fears
  • “To be clear, any increase in yields will hurt some borrowers, regardless of the cause”
• Recent rise in yields in U.S. and U.K. largely due to hopes that additional fiscal stimulus will boost economic activity
  • Yields would have to rise a lot further to present serious threat to valuations of other assets or to economy