FAST FIVE: Rabo: There Is A Lot More Happening Than Just Movement In 10-Year Yields
This isn't the first thematic trading idea that has called out market optimism as wrong using logic and historical hindsight.
One can focus on the fact US 10-year yields went up again yesterday, and wonder if central banks will act; or one can see geopolitics will necessitate central bank curve crushing – and more beyond.
That speaks volumes about the US disconnect between its China hawks, China doves, and those who just think bonsais are neat to look at.
Those matter a lot right now: but they will ultimately be driven by larger geostrategic themes more than short-term moves in the price of gardening tools.
No surprise given how slow to react the RBA always are, perhaps, but something will have to give soon as Aussie 10s blast up towards 1.80% again (nearly 15bp higher in three days): the thematic thinking above still suggests it will be the market, not central bank control.