Goldman Sachs's Global Head of markets and....>

BONDS: Goldman Sachs's Global Head of markets and Macro, Francesco Garzarelli

writes that GS forecasts "higher bond yields, and higher implied long rate

volatility." 

- Garzarelli points out that while the Fed's move yesterday is de-coupling short

rates "long-term bonds remain highly correlated across regions, driven by an

unusually high degree of co-movement in the term premium".

- Looking at next year Goldman writes "as Fed Funds break above 2%, we think

that the market may test the resolve of the ECB and the BoJ to keep negative

rates, leading to some re-coupling in rate expectations" and Goldman expects the

term premium to break higher, hence higher long rates and higher long implied

vols.