HALISTER1: Fiscal Easing Adding to Risks Core EGB Yields Will Rise: BlueBay

Fiscal Easing Adding to Risks Core EGB Yields Will Rise: BlueBay

(Bloomberg) -- The outlook for core government bond yields looks increasingly asymmetric to the upside and the rate complex could become more volatile, Russel Matthews, Portfolio Manager, European bond strategies at BlueBay Asset Management, writes in emailed comments.
  • Bond markets face short to medium term challenges rather than a long term structural shift
    • Yields may rise materially from current levels amid headwinds including better U.S. data, extended positioning in Europe and valuations which are completely divorced from historical reality
    • The growing expectation that fiscal policy will be the new channel for stimulating growth and inflation is also an important factor
  • Expects a patch on Italy’s banking sector in coming weeks which says should give a meaningful lift to peripheral government bonds
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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Russel Matthews (BlueBay Asset Management LLP)

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