Adam Smigielski
By Padhraic Garvey, CFA & Michiel Tukker
The front end remains solid, the back end less so as the tax bill gets passed ahead
The market discount has the funds rate bottoming in the 3% to 3.25% range, and then
Rates Spark: Back End Vulnerabilities
Summary
- The market discount has the funds rate bottoming in the 3% to 3.25% range.
- While there's been a material rate-cut-driven fall in US market rates, there are some risks ahead for longer tenor rates coming from inflation and the fiscal deficit.
- In the UK, a potential slowdown of the Bank of England's balance sheet could help keep longer-dated Gilt yields down, but the global environment is not conducive to this.
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