Wednesday, December 8, 2010
Have bonds peaked? Mortgage rises on the way
The yield on 10-year Treasuries â€“ the benchmark price of money worldwide and the key driver of US mortgages rates â€“ has rocketed to 3.3pc, up 35 basis points since the announcement of a fresh fiscal stimulus package. This dramatic rise in yields threatens to short-circuit any benefits of stimulus. The bond rout raises concerns that the US authorities may be losing control over events. The Treasury sell-off has ricocheted through the global system, triggering bond sell-offs in Asia, Europe and Latin America. The rise in yields risks becoming a textbook case of a central bank losing control over long-term rates. "Nobody believes that we're slipping into deflation anymore. That phase has passed."