US treasury rate re raised over 2.3 percent again. The rate bottomed up at the 2.3 and increased up about two months ago. And then as you know rate started to decline rapidly as the woes about deflation in Euro area were intensified. The rate reached under 2.0 percent at once and many market participants anticipated re decline in US treasury yield again.
However 10 year yield remain about 2.3 for some time due to two possibilities or concerns between to drag down to deflation like or by Europe and own reflation except for deteriorating external environment.
As the oil price dropped because the OPEC committee failed to decrease their supply, US rate decline under 2.3 again. In line with this, US TIPS breakeven dropped to 1.8 as well.
I thought the bull market does not finish yet. The rates seem to lower than 2.0 again under mitigated inflation expectation. Namely secular stagnation scenario including savings glut, constraints of zero bound interest rate, a lack of safety asset such as governments bond and slowing demand due to income inequality seems to be real for some time. If then, the rates will continue to be lower and lower by next year at least.
On the other hand, I have been somewhat doubtful about this, too. Because I look at the possibility of super cycle on equity market in US. And it would be so called reflation under tempered inflation. Recently I consider lowering oil prices as a way to boost the economy on the aggregate supply side contrary to secular stagnation scenario based on aggregate demand side.
So I've thought if we have long position on bonds we should be very cautious whether the rate could be turn up.
And then last weekend?
The US 10 year rate came to over 2.3 percent. And how can we see this?
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