4 Feb 2014
Flash: Pricing in the curve to the dollar - - Rabobank
FXStreet (Guatemala) - Strategists at Rabobank noted the Fed decided to stay on its tapering course of $10bn per meeting and last week’s FOMC statement only mentioned domestic considerations, there was no reference to emerging markets.
Key Quotes:
“While the emerging market turmoil has not altered the Fed’s tapering course, it is affecting USD rates. In conjunction with disappointing domestic data it has led to a decline in the 10y US treasury yield of about 40 bps since the start of the year”.
“These two factors, a potential domestic slowdown (or is it just the weather?) and emerging market turmoil, are challenging our outlook for longer-term USD rates”.
“For now, we have reduced our 12 month forecast for the 10y US treasury yield to 3.40% from 3.50%. However, we will monitor further developments in the US economy and emerging markets and take another a critical look at our forecasts. Clearly, downside risk to our baseline scenario has increased”.
Key Quotes:
“While the emerging market turmoil has not altered the Fed’s tapering course, it is affecting USD rates. In conjunction with disappointing domestic data it has led to a decline in the 10y US treasury yield of about 40 bps since the start of the year”.
“These two factors, a potential domestic slowdown (or is it just the weather?) and emerging market turmoil, are challenging our outlook for longer-term USD rates”.
“For now, we have reduced our 12 month forecast for the 10y US treasury yield to 3.40% from 3.50%. However, we will monitor further developments in the US economy and emerging markets and take another a critical look at our forecasts. Clearly, downside risk to our baseline scenario has increased”.