Bonds: View rallies as selling opportunities - ANZ

Analysts at ANZ suggest that there is a limited downside for bond yields as inflation normalises and with real yields so low, they view bond rallies as selling opportunities.

Key Quotes

“The initial response to the unchanged guidance from the Fed was a rush for “risk-on” trades. But there is definitely a sense that the Fed is moving into a more earnest phase of the tightening cycle, and whilst still gradual, it is considerably more advanced than other major central banks. That said, there is an emerging push back against the progressive easing that markets have been accustomed to in recent years outside of the US.”

“The ECB shifted to a more neutral position last week, overnight the BoE acknowledged that there may be circumstances under which it might be appropriate to raise interest rates sooner, and as we know, the Fed’s guidance is to steadily progress its gradual tightening, data dependent. That probably leaves limited downside for bond yields as inflation normalises and with real yields so low, we view bond rallies as selling opportunities.”