If I may, isn't nominal yield the wrong target variable, while the real yield maybe explains more? Japanese yields have been rising a lot, yet till recently the real yield was negative. And, in general, now that it occurs to me, there is that yield proxy that is the nominal GDP: yield tends to track more or less an appropriate average of nominal GDP growth. Just sharing. Helps?
Government bonds are the least-favoured category in our current TAA consensus, the most broadly underweight corner of fixed income right now.
But your own framework argues the real driver is spending discipline, not duration or country, which means Switzerland and the UK shouldn't be sitting in the same underweight bucket at all.
A consensus-level underweight on government bonds is really just an average of two very different stories, one where markets trust the government and one where they don't.
If I may, isn't nominal yield the wrong target variable, while the real yield maybe explains more? Japanese yields have been rising a lot, yet till recently the real yield was negative. And, in general, now that it occurs to me, there is that yield proxy that is the nominal GDP: yield tends to track more or less an appropriate average of nominal GDP growth. Just sharing. Helps?
Government bonds are the least-favoured category in our current TAA consensus, the most broadly underweight corner of fixed income right now.
But your own framework argues the real driver is spending discipline, not duration or country, which means Switzerland and the UK shouldn't be sitting in the same underweight bucket at all.
A consensus-level underweight on government bonds is really just an average of two very different stories, one where markets trust the government and one where they don't.