Halister News

(Bloomberg) -- While “we are not in the bearish duration camp,” there are three themes that could result in higher rates and higher term premiums, BofAML strategists Dora Xia and Shyam Rajan say in March 11 note.

• First, “a shift in tantrums from dollar to rates on better U.S. data”; dollar’s “struggle to rally on better payrolls and better ISM data is noteworthy”
• Second, increased JGB volatility, which “could translate into higher risk of Japanese investors deleveraging duration risk across the globe”
• Third, BOJ and ECB shifting focus from negative rates to portfolio balance; this “should be a positive for risk assets and allow for the same conditions that saw higher yields during US QE episodes”