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‘An Orderly Clearing Of Markets’: Goldman On The Bond Selloff
Odds may now favor a "sharp reversal" in US long-end yields.
That's according to Goldman, but it's also according to common sense. Even if you think the worst bond selloff in at least a generation (and quite possibly in American history, depending on what, exactly, you mean by "US government bonds") has further to go, or that the fundamentals argue strongly for structurally higher yields in perpetuity, extreme market moves over compressed time frames are typically good fades. The problem is pic
I understand people would like rates to fall again but frankly the notion of fair value in the low 4% range for 10s seems too low. Even at 2% inflation, the implied real level for these bonds would only be 2%. Since inflation is unlikely to reach as low as 2% anytime soon, it seems to me that 10s will have to stay at 4.5 or more for a while yet.
Is war inflationary?