The 10Y Treasury yield has jumped nearly 130bp from its low point in early May. Given the tight ranges and low volatility of yields during the most of QE era, this kind of move in just over 3 months seemed stunning to some investors. Consequently, the question that has come up often recently is: what has been driving Treasury yields?
As UBS' Boris Rjavinski notes, several years ago a rate strategist would give you a straightforward and predictable answer: inflationary expectations, economic growth projections, and current and future monetary policy. The “monetary policy” part of the answer would likely simple deal with the path of the key short-term policy rate. Terms such as “quantitative easing”, “communication policy”, “thresholds and triggers” were foreign to bond investors during the era of pre-credit crisis innocence.
Read more...What's Driving Treasury Yields? | Zero Hedge News
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