In a research report last week, we noted that there is mounting evidence that supports another cyclical upleg in long-dated government bond yields. Specifically, global economic growth conditions are strengthening and inflation is set to surprise to the upside. Most central banks have already shifted into the “pause club”, and a “hike club” is now emerging. Also, while Kevin Warsh would be an even more dovish Fed chair than Jerome Powell, it could lead to more unorthodox policy changes and may ultimately induce more steepening pressure of the Treasury curve.
