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Quicktake: Cross-Market Opinion On Rate Sale

US TSYS
TD Securities strategists opined on the disorderly global sell-off in rates over the last few weeks, "with some countries outpacing" the sell-off in US rates. "While much of the move was due to the global nature of the economic optimism regarding the end of COVID, there was also an element of positioning."
  • That said, TD believes the rise in yields "is overdone in the front end across most markets. We are long 5y Treasuries and received 1y1y in EUR and 1y1y in CAD. We also received 2y1y in the UK versus the US."
  • We look for US rates to continue to be pressured higher amid heavy issuance and a Fed unwilling to push back against the move. If US rates keep rising, we expect AU and GE yields to outperform. We are also long 10y UK against Bunds and long AU 10y against the US. On the other hand, bonds in CA and UK should be the most vulnerable to a further rise in US rates.

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