Astonishingly, the yield of the 10-year US government bond has risen by more than 60 basis points from its level on 18 September, the day of the last Fed policy meeting. And the increase in yields has occurred right across all the major maturities.
While most analysts agree on the list of potential contributors to this unusual development, there is little consensus on their relative importance.
This matters for what we forecast about the future well-being of the US economy and for the sustainability of this year’s impressive stock market performance. Fortunately, the next eight days are set to bring clarity to a rather confusing situation.
Let’s start our review with the run-up to the last Fed policy announcement which, itself, was rather unusual. The widely held expectation that the Fed would cut by a quarter point was upended by what was seen as…
