“Violent Swings”: What Yellen, Greenspan, And Dimon Say About Rising Rates

Earlier today, I highlighted some recent commentary out of Deutsche Bank who lists among their their two “risk scenarios” for 2017 a disorderly selloff in long-term rates.

Essentially, the fear is that assuming there’s no flight to safety triggered by European political turmoil and/or some unforeseen Trump trauma, yields could overshoot to the upside topping 3.5% on 10s. This could in turn beget still more selling pressure in a self-feeding loop as banks seek cut their paper losses. In that same vein, it’s also worth noting that, according to Bloomberg strategist Masaki Kondo, the BoJ’s yield curve control has forced Japanese investors into U.S. agency bonds such as those issued by Freddie Mac and Ginnie Mae. “Net inflows into U.S. agency bonds from Japan totaled $90.0b in 2016 through end of October, already surpassing the annual record of $71.3b in 2010,” Bloomberg notes.

Of course trigger happy algos and inexperienced money managers (some of whom have literally never seen a rate hike cycle in their entire career) will only exacerbate what Deutsche warns could well turn into a “panic.”

Well, with that as the backdrop, consider this list of quotes compiled by Deutsche Bank analyst Masao Muraki who apparently has a thing for red, bolded type, and underlining:

ratehikes

(Quotes compiled by Deutsche Bank)

 

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