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Real Yields Fall Back Near Pre-Bullard Levels

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  • 10Y real yields are down a further 8bps today in a continuation of yesterday’s decline, largely unwinding last week’s climb after Bullard noted Taylor rules indicating a policy rate in the region of 5-7% with himself seeing a minimum 5-5.25%.
  • At 1.41%, real yields move closer to recent lows of 1.35% in days after the US CPI miss was seen cementing a stepdown to the 50bp hike in the Dec meeting, with the recent decline offering a tailwind for risk assets.
  • It remains to be seen if real yields fall much further ahead with the FOMC minutes tomorrow. In line with recent Fedspeak, we expect some pushback against the notion that a step-down to 50bp is a prelude to a pause, let alone a pivot whilst there is likely some pushback on market pricing for cuts next year.


10Y real yields (white) and S&P E-minis (yellow)Source: Bloomberg

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  • 10Y real yields are down a further 8bps today in a continuation of yesterday’s decline, largely unwinding last week’s climb after Bullard noted Taylor rules indicating a policy rate in the region of 5-7% with himself seeing a minimum 5-5.25%.
  • At 1.41%, real yields move closer to recent lows of 1.35% in days after the US CPI miss was seen cementing a stepdown to the 50bp hike in the Dec meeting, with the recent decline offering a tailwind for risk assets.
  • It remains to be seen if real yields fall much further ahead with the FOMC minutes tomorrow. In line with recent Fedspeak, we expect some pushback against the notion that a step-down to 50bp is a prelude to a pause, let alone a pivot whilst there is likely some pushback on market pricing for cuts next year.


10Y real yields (white) and S&P E-minis (yellow)Source: Bloomberg