Industry Voice: Surge in Rates May Be Overstating the Case for Inflation

Longer-dated Treasury yields have climbed as markets consider whether economic growth and inflation expectations might accelerate more rapidly. We believe inflation pressures will remain in check and bond yields will be range-bound.

clock • 1 min read

U.S. rates have moved substantially higher in the past few weeks, advancing a trend that's seen Treasury yields rise from historic lows amid the depths of the pandemic last year. As markets try to gauge whether economic growth and inflation could accelerate more quickly than anticipated in 2021, many investors are left wondering whether rates will climb further in the near term. We think upward pressure on inflation is likely to be relatively contained as the global economy continues to recover from the effects of COVID-19, and that yields on longer-dated bonds should stay broadly bounded within recent ranges as central banks keep short-term policy rates anchored near zero.

 

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