We have generally revised our path for yields lower on two grounds: First, we tweak our forecasts to reflect changes to local policy expectations and inflation trajectories. Second, we now expect a smaller amount of term premium repricing in the US and, by extension, smaller spillover effects into other non-US yields…the direction of travel is still higher yields across the G10.
As can be seen in Exhibit 1, our new projections are lower across the board for this year, although the direction of travel is still towards higher yields.
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David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
