Sovereign bond yields are really one big market in the current era. Different central banks are having different types of inflation or deflation fights all the time and are varying states of the stimulate-normalize-hike cycle at any given time. But this is swamped by the ability of global portfolio managers to allocate capital all over the world and this shows up in the synchronization of bond prices (yields) over time.

It’s a global marketplace for money, more so than ever. We need to think bigger than just whatever might be influencing Treasury yields domestically.

US Rates Anchored Overseas

One risk to our bullish outlook is if US yields play “catch-down” to considerably lower rates in Europe and Asia, and a replay to the 2014 to 2016 market environment develops characterized by narrow internal breadth and wide credit spreads.