Nomura Securities on American Rate Strategy: U.S. Markets at the Mercy of EU Policymakers
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Nomura Securities on American Rate Strategy: U.S. Markets at the Mercy of EU Policymakers
Analyst, George Goncalves, said, "Although the uncertainty out of Europe has been a key and obvious driver of core rates markets, we underestimated its influence on US rates and thus were not expecting the panic final push lower in rates during NFP week. The fear trade in May forced many to close shorts as the reach for duration was broad base, even French bonds rallied. We have not changed our bearish strategic outlook on rates; we think that even if there were another Fed program in place, all the markets can wish for is that the Fed restrains the backup in yields once there is rolling out of EU solutions, however the lack of response from European authorities could result in a further overshoot for US rates."
Analyst, George Goncalves, said, "Although the uncertainty out of Europe has been a key and obvious driver of core rates markets, we underestimated its influence on US rates and thus were not expecting the panic final push lower in rates during NFP week. The fear trade in May forced many to close shorts as the reach for duration was broad base, even French bonds rallied. We have not changed our bearish strategic outlook on rates; we think that even if there were another Fed program in place, all the markets can wish for is that the Fed restrains the backup in yields once there is rolling out of EU solutions, however the lack of response from European authorities could result in a further overshoot for US rates."
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