Fixed income chart pack for January
Althea Spinozzi
US Treasury yields have broken above key resistance levels. We expect them to continue to rise and the yield curve to bear-flatten as the Federal Reserve gets ready to tighten the economy. Accelerating real yields show that financing conditions are rapidly tightening. It spells trouble for risky assets, which despite remaining supported by deeply negative real yields, they'll suffer as TIPS approach 0%. Currently, duration is more toxic than credit quality, with investment-grade corporates and hard currency EM government debt paying the highest price.