In the video below, we look at a series of charts on US bond yields from the Weekly Macro Themes report. The main chart of interest shows our composite sentiment indicator for the bond market, which has done a 180' from extreme pessimism late last year, to now back to the heights of optimism.
This has important short-term timing implications as discussed in the video. Taking a longer term perspective, we also look at the relationship between US 10-year bond yields and longer term measures of US nominal GDP growth, and give insight into what that means for the outlook. We also examine real yields and the term premium and comment on how even just through some relatively mild mean reversion, a case can be made for higher bond yields over the medium-to-long term.
Thus in the end we come to a conclusion based on the charts that the short-term and medium/long term outlook is for higher yields. Of course it will pay to keep on top of the global macro currents.