Who stands to benefit from the yield-curve steepening in Treasuries and Bunds?
The BTP/Bund spread falls impressively
Should investors in U.S. government bonds be worried about what a Trump election win would mean for their asset class? We see good reasons to expect yields to rise.
After a historically long dry spell, 2024 could become a good year for bonds. A resurgence of inflation remains a risk, but the high carry provides some security cushion – especially for corporate bonds.
Compared to bonds, U.S. equities are as overvalued as they were in 2003 and 2009. Back then, both asset classes were cheap. Hard to argue that this is the case again today.
From both a market and a political perspective, the “news” that Fitch now rates United States' long-term ratings as 'AA+' contained no new information and is likely to have very little direct market impact.
Next week the ECB's balance sheet will shrink by over 6%. Further reduction will take place much more slowly – with uncertain consequences for the markets.
