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2 weeks ago | 
think.ing.com | Padhraic Garvey |Michiel Tukker |Benjamin Schroeder
A pause for now is good news for the eurozone and the 10Y swap rate is back at levels from before "Liberation Day". The significant rise in UST yields played an important role in this. The front end of the curve still trades at lower rates, reflecting the still-outstanding risks on investors’ minds. Markets are reverting to an ECB landing zone between 1.75-2%, a range which was held for many months previously. But we remain wary that the situation could easily worsen again.
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2 weeks ago | 
think.ing.com | Padhraic Garvey |Benjamin Schroeder |Michiel Tukker
Whilst Dutch pension funds feel the pain from lower equity prices, the coalition party NSC is still trying to change the rules of the current reforms. In the latest proposal, each pension fund would no longer be required to obtain a vote of approval before transitioning from a defined benefits system to a defined contributions system. Instead, pension funds would have to offer the participants the possibility to opt-out from the transition of his or her assets to the new system.
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2 weeks ago | 
think.ing.com | Padhraic Garvey |Benjamin Schroeder
The impact effect of tariffs was the discount for a recession and more rate cuts, and that combination was deemed a good rationale to buy bonds. It still is, and still could be in months to come. But the more troubling narrative of late is the notion of what we call a 'sell America Inc.' risk. It's tough to get a gauge on this, and by the way it does not have to be selling by foreigners, it can also be from domestics.
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2 weeks ago | 
think.ing.com | Padhraic Garvey |Benjamin Schroeder |Michiel Tukker
Dollar exposure's getting pushed and pulled in a still whippy market We make the argumentation for the US 10yr to break down to 3.5% here, and why it's likely to revert then higher again. Beyond that, there are three factors to latch on to. The first is the fall in breakeven inflation. This was unexpected, as tariffs are generally accepted as placing upward pressure on prices, even if the debate as to whether it's inflationary is not settled.
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3 weeks ago | 
think.ing.com | Michiel Tukker |Padhraic Garvey |Benjamin Schroeder
Inflation numbers unlikely to cause a break below the 1.75-2% ECB landing zone range The eurozone inflation numbers are coming in just a day before Trump’s tariff announcements. With risk sentiment deteriorating over the past week, markets have been keen to price in a European Central Bank landing point of 1.75% again, after hugging closer to 2% for most of this month. But to break sustainably below 1.75% seems more difficult and hasn’t happened yet this year.
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4 weeks ago | 
think.ing.com | Benjamin Schroeder |Padhraic Garvey
Tariffs are complicated, as they cut two ways. The price rise risk is bad for bonds, while the threat to economic activity is good for bonds. When the US first enacted tariffs on Mexico on 1 February 2025, there was a clear reaction from Treasuries – to go for lower yields, alongside a stronger US dollar. This time, the early 25% tariff-on-autos announcement, resulted in a clear rise in yields, alongside a somewhat weaker US dollar. So what gives? Basically, tariff news can have either effect.
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1 month ago | 
think.ing.com | Benjamin Schroeder |Padhraic Garvey
Tariff headlines, data and of late also European Central Bank commentary again continue to inject volatility into longer yields. It has taken 10y Bund yields on another roundtrip above 2.8% and back with the curve maintaining a steepening bias. As for the latest ECB commentary, it was more guarded than the surprisingly blunt assessments from doves earlier – Kazimir, Muller and Vujcic all left the April decision more open on Tuesday.
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1 month ago | 
think.ing.com | Benjamin Schroeder |Padhraic Garvey
10yr Treasury yield to range trade between 4.25% and 4.35% this week Material moves in Treasuries on Monday. Clear moves higher in yield. The survey evidence released earlier in the day was a positive, with the services side of the economy in particular showing resilience. But the bigger impulse comes from the lull that this week is ahead of what the Trump administration mischievously calls “liberation day” on 2 April (so mid next week).
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1 month ago | 
think.ing.com | Padhraic Garvey |Benjamin Schroeder
US Treasuries may have gone through quite a day on Thursday – down and back up in yield – but they've ended back where they started. We maintain our view that the FOMC outcome was effectively a one-day move, with minimal legacy in terms of immediate direction. That said, we also view the FOMC outcome as a whole as nodding towards dovishness, but with numerous caveats. When we look ahead, we do so nervously.
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1 month ago | 
think.ing.com | Padhraic Garvey |Benjamin Schroeder
The Fed becomes a bigger net buyer of Treasuries from April We had targeted an end of quantitative tightening (QT) by mid-year. The Fed has just snuck in a slowing from April, as a step. It comes against a backdrop where the Fed sees some evidence of liquidity tightening. They are being super cautious here, as they don't went to repeat 2019 when they overdid it with QT, resulting in some quite severe liquidity shortage issues to deal with.
