Rising Treasury yields welcome at the Fed


It's not just U.S. data which justifies the big run higher in bond yields, says Goldman's Francesco Garzarelli, but there's even been positive surprises out of Europe.

The Fed isn't worried about a 10-year yield in the 2.80% area, says Garzarelli - instead it was this spring's bubble-like 1.6% yield which had policymakers concerned. Volatility in fixed income could may be an issue now, but the September taper as well as the introduction of a new Fed chief should calm things a bit.

Turning to rising long-term rates in the U.K., Garzarelli reminds the British economy "runs very much on variable rates," and as long as the Bank of England holds short rates down, higher Gilt yields should have little effect.

TLT -1.1%, TBT +2.1%.

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Comments (2)
  • chuck lewis
    , contributor
    Comments (436) | Send Message
     
    Editor The Lewis Letter
    Higher rates via the 10 year Treasury disturbs mortgage, auto loans, credit card rates and has a slowing affect on spending. Would that concern the doves/hawks in the Fed bird house? Certainly slows the economy up.
    3 Sep 2013, 09:51 AM Reply Like
  • Grant Dossetto
    , contributor
    Comments (200) | Send Message
     
    I see Goldman still wants some more treasuries on it's balance sheet.
    3 Sep 2013, 09:53 AM Reply Like
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