The economists of Commerzbank analyze the implications of rising US yields.
Explosion of yields in the US
USD reaction to rising US yields disappointingly small. This rally does not appear to be completely free of a damaging risk premium for the USD. Of course, this does not have to remain the case. It is a snapshot of the current situation.
However, it makes sense. It fits into this picture that mortgage applications in the US have continued to fall and have now reached their lowest level in 28 years. The housing market is one of the most important channels through which rising interest rates can trigger a recession. A stagnation in the US housing market will significantly hamper the flexibility of US employees, which, in addition to the direct effect, will also slow growth.
The rise in yields seems to confirm our American economists, who continue to expect a recession in the United States. The last of the recession Mohicans it seems to me sometimes. But for now, they seem to be the lone voices that will ultimately be confirmed.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
