Bonds: More hawkish than the consensus - Natixis

According to Jean-François Robin, Research Analyst at Natixis, there is no change this month to their scenario for coming months as regards the bond market, this scenario remaining more hawkish than the consensus, as they see the Bund at 1% and the TNote at 3.30% come end-2017.

Key Quotes

“Even though Donald Trump has demonstrated once more that you do not run a country like a business (“thank God”), our view remains that a change in the policy mix is afoot in the US. The failure to repeal and replace Obamacare will probably spur the new administration to push through tax cuts. We therefore see the US deficit deepening to 4%, growth accelerating to 2.3% and inflation to 2.8% in 2017, with the economy set to reach full employment. This can be expected to drive up US interest rates, taking the 10-year to more than 3%, while short interest rates can be expected to react to a scenario in which the Federal Reserve will press ahead with its first real monetary tightening cycle in a decade”