Marking to market - again. It's time to mark our US yield forecast to market for the second time in as many months, as our belief that real yields would rise this year has not worked. Both real rates and inflation breakevens fell sharply as the European sovereign credit crisis triggered fears of contagion that might promote a US double-dip recession, slower global growth and deflation. Real 10-year yields measured in the TIPS market have declined to just over 1% - close to record lows - while 10-year inflation breakevens are near 1.8%, back to October 2009 levels.
Richard Berner, James Caron & David Greenlaw, Global Economics Team, Morgan Stanley
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[Source: DailyFX Forex Market News]
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