“It seems that markets have started to move from worrying about a US recession to worrying that the economy may be too strong — after a string of recent data showed a more resilient economy than many anticipated,” Menon says.
Risk-free rates stymied global markets, in particular in the US. The 10-year US treasury yield was at 4.21% on Oct 25, up 58 basis points since Sept 16, just ahead of the Federal Reserve’s 50 basis point Federal Funds Rate cut.
The Fed slashed interest rates by 50 basis points at its September meeting and indicated it would lower rates further by the same amount by year-end. Despite this, the 10Y UST yield has increased sharply, observes Vasu Menon, managing director, investment strategy, OCBC.
