How Global Bond Markets are reacting!

Highlights for May 

G10 Macro

Global reflation remains in full swing. G-4 central banks are ramping up balance sheet expansion and even the ECB is being dragged to cut rates as economic conditions at the core of Europe deteriorate. Fiscal austerity has become the economic equivalent of kryptonite and central banks are being forced to accommodate those policies.

G10 Rates

The growing tide of global QE is no doubt helping to suppress yields, but the disconnect between global bond yields and the economy still strikes as very odd.

G10 FX

The US Dollar outlook. The US economy is growing, the US trade imbalance is improving and the long-term secular bear USD trend is very mature.

EMFX & Rates

EMFX and yields to be driven by the balance of monetary easing, bias for weak currencies, and global QE inflows.


Industrial base and precious metals and oil could trade higher in the coming months, as prices are at or near key support levels.

What Has Changed

Global growth slowdown, declining risk appetite and softening inflation have led to central banks taking a less hawkish stance. The ECB has cut the refi rate and global bonds yields are lower. Weaker global growth and oversupply led to sharp industrial commodity correction. Precious metals suffered a technical rout and loss of spec interest.

What can Change

Year-end G10 yields mostly unchanged but lower near-term path. Look for a stronger USD against most G10/EM FX and more easing from EM central banks and less hikes in Brazil. Lower commodity forecasts, but dovish central banks, prices near key supports, and poor but not grim fundamentals could help short term prices for metals and oil.

Eric Green, Andrew Kelvin, Shaun Osborn, Cristian Maggio



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