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Rates Spark: No Covid rally for bonds
Elevated inflation is not a new story, but the Fed is an evolving one. An accelerated taper, and a quick step towards rate hikes is on the menu for 1Q and 2Q. That's not a "next year" story any more. It's front-and-centre, which helps to concentrate minds. As always when we get these moves there is a debate as to whether this is a price or quantity driven event. So far I see it as a price driven one. In other words, it is not being driven by huge volumes. It is more driven by a re-calibration of yields towards more sensible levels, without much resistance. Hence big moves have been achieved with relative ease. ... (full story)