Padhraic Garvey

1 week ago | think.ing.com | Padhraic Garvey

US Treasury yields have marched higher again – what's going on? The impact of tariffs was the discount for a recession and more rate cuts, typically deemed a good rationale to buy bonds. It still is, and could be in months to come. But for now, we've gone the other way. Treasury bond prices have been bullied lower in the past few days, and yields have shot higher, not what would typically be expected on the build of a material recession risk. So what's driving this? Here's how we see it.

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.

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.

2 weeks ago | think.ing.com | Carsten Brzeski |Padhraic Garvey |Chris Turner |James Knightley

Carsten Brzeski: 'Caution is warranted' US President Trump has decided on a 90-day reprieve for the "higher reciprocal tariffs" for countries that have not "retaliated" against his announcements from last week. That is, all countries except China. This means every country is now at the "universal" tariff rate of 10% for the next 90 days. China, though, because it put tariffs on US-made products entering China to 84%, will now receive a 125% tariff.

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.