[London, 1st Reuters]–The Bank for International Settlements (BIS) released a quarterly report on the 1st that the last month’s surge in global bond markets will completely change the outlook for financial markets. He pointed out that it might be. He also mentioned that market volatility is increasing due to fluctuations in gamestop stocks by individual investors.
But big changes are seen in the US Treasury market, which affects the global bond market. If the economy returns to normal this year with the new coronavirus vaccine, US Treasury yields are rising from the view that unprecedented new corona support measures will cause inflation. The US index 10-year bond yield exceeded 1.6% last week, rising from the beginning of the year to nearly 70 basis points (bp). As a result, government bond yields in Europe and Japan have also risen.
“Recent market nervous movements show that rising bond yields and reflationary trading are completely changing the outlook for financial markets,” said Claudio Borio, director of the BIS Financial and Economic Affairs Bureau.
Economists compare this phenomenon to the 2013 “tapered tantrum,” which raged the market shortly after former Federal Reserve Chairman Ben Bernanke suggested a slowing pace of bond purchases. Borio said the prolongation of Tantram will depend on the rapid acceleration of the global economy and how major central banks respond to rising bond yields.
Fed Chair Powell said last week that he would not curtail stimulus measures in the near future. European Central Bank (ECB) President Christine Lagarde has issued a similar message. However, the United States has just agreed on a $ 1.9 trillion stimulus package. In terms of controlling inflation and stabilizing financial markets, Mr. Borio said the central bank “must consider how rising bond yields will affect the central bank’s goals and take appropriate action.”
– .
