Rates Spark: The Damage Has Been Done

Despite lower oil prices following an Iran-related shipping development, interest rates are expected to stay elevated. Structural shifts in real yields and persistent hawkishness from the ECB suggest a higher baseline for bond yields.

Key Takeaways

• 1.Bond yields are expected to remain elevated despite a drop in oil prices.
• 2.The ECB maintains a hawkish stance with further rate hikes likely.
• 3.US 10yr real yields have structurally increased, suggesting long-term rates will not collapse.

Table of Contents

• Rates Spark: The damage has been done
• Treasury yields to remain sticky to the upside, as real yields remain elevated
• Don't expect rates to return to when everything started
• Tuesday's events and market views

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