Worldwide long end yields moving higher today ,hard to pinpoint one specific reason. Possibly pricing in some type of Yield curve control at nerxt weeks Fed meeting thus causing a steeper yield curve?
From Bloomberg (BBG)
(Bloomberg) — U.S. rate strategists in weekly research
published before Monday’s market open considered how the Fed
might approach yield-curve control, and whether it would
likelier follow the RBA or BOJ model. Curve steepening remains a
broadly held expectation, with Deutsche Bank dissenting.
* Bank of America (Mark Cabana, Bruno Braizinha, May 29 report)
** Yield-curve control is increasingly likely to be adopted this
year “to reinforce forward guidance for a zero target rate”
** Fed would likely cap rates at 25bp at least to the 3Y point,
possibly the 5Y, and beyond “if macro outcomes disappoint”
** Purchases of Treasuries would probably continue in tenors
beyond the YCC horizon
** Largest market impact would likely benefit 5Y-7Y segment,
reflecting “increased probability of the caps being
incrementally extended out the curve”; 5s30s should steepen
* Barclays (Anshul Pradhan, others, May 28 report)
** Curve control would likely take the form of a 25bp cap on 3-
year yields (as RBA has done); a 1% cap on 10-year yields is
less likely
30 year yield net change on day:
USA +3.1 and Canada +4.6 Bps
