Talking Points:
• The second biggest jump in global yields in nearly two years yesterday extends a 4-day rise
• Divergent monetary policy regimes between the US and Japan/Eurozone will see an uneven turn
• We weigh the economic merits of low yields; and we discuss the timing and look of the eventual turn
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Global government bond yields are on pace for one of their biggest advances since mid-2013. With the Fed turning market speculation of a rate hike sometime this year, the conversation is starting to turn to the direction of global yields. Given the intensity of this week's rebound and the bold calls on bonds from certain high-profile money managers, there is a foothold for those expecting a rebound from near zero - and in some cases negative - market rates. While the value of accommodative policy and the leverage it exacts on market yield has likely hit its zenith, a lasting reversal will take time. Furthermore, different regions' yields are unlikely to move exactly in tandem given divergent policies (such as the ECB and BoJ QE programs against the Fed's hike conversation). In today's Strategy Video we discuss what a turn in global yields will look like in the market and the time frame it will play out.
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