RESEARCH CONTENT

Beyond stronger than expected economic data and central bankers surprising with their hawkishness, there are two other important risks to a positive performance of fixed income markets:

• Deteriorating government finances

• A rise in commodity market prices

This research provides updates on recent data on US government finances, demonstrating the continued challenges for the market to digest the enlarged government bond supply. Market internals suggest the risks are currently heightened, as the 2s10s curve has not bear flattened this year as rate cuts were removed from the front end.

The report also highlights the risks to markets should commodity prices break some not-too-distant key resistance levels.