Budget Deficits Likely Hinder Meaningful Fall in Long-End Bond Yields
Dow Jones
Sep 22
0613 GMT - Long-end government bond yields face challenges to move significantly lower given budget deficit issues, says Jefferies' Mohit Kumar in a note. "Even if oil prices move lower, we do not think that long end rates could rally significantly," the global economist says. The deficit picture, particularly in Europe, is concerning, especially considering the upcoming budget discussions in the fourth quarter and elections in various countries next year, he says. "With central banks not delivering on forwards (our view) and deficits still a concern, macro fundamentals would argue for a steeper curve," Kumar says.
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